(Source:imovermyhead)

From all appearances, the United States and China have an adversarial relationship. Economically speaking, the former nation has always been a bastion of capitalism while the latter has introduced sweeping market reforms into what was a communist system.

Leaders from both sides regularly rattle their sabers over political issues and express concerns what the other is doing within its sphere of influence. But appearances, even those maintained over decades can be deceiving. Dig deeper and you will find two nations who have grown so close in the past decade that their economic futures are now to a large extent co-dependent.

Many people in the US are uncomfortable with the fact that China today wields tremendous power, thanks to its more than one trillion dollars invested in US government debt. On the flipside, the health of the US economy is crucial to the success of China’s economic growth, given the demand for cheap goods from American consumers. For more than a decade, both countries have benefited from this arrangement, but now in the midst of the global financial crisis, leaders are raising questions about its long-term viability. Does it make economic sense?

You aren’t the only one worried about your portfolio. In recent weeks, China’s leaders have publicly fretted over the health of their portfolio and their dependency on the US economy. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried,” Chinese Premier Wen Jiabao said, according to comments reported by the New York Times in March.

A Communist leader worried about his investment in the US Economy? What is this world coming to? China’s leaders are freaking out because they fear they have over-invested in the US. And with inflation expected to rise as the result of printing more money to pay for the stimulus plan, China is fearful that its investments portfolio will lose significant value. There are other cries in China to reduce its dependency on the US and to diversify, raising the nightmare scenario of a significant divestment in US assets. While the move may seen logical, it’s unlikely that China will do anything drastic, given the sheer size of its investment in the US and the global consequences that a divestment would cause.

“From an economic aspect, it would be suicidal for them to sell their US assets, which would diminish the value of their portfolio,” said Kathryn Dominguez, professor of economics and public policy at the University of Michigan. “They are in a way stuck because were they to do this it would harm them at least as much as it would the US”. Such is the reality of a globalized economy. Systems are interconnected to the point that drastic moves by one country will have drastic effects on many other countries. Pulling out hundreds of billions of dollars in US Treasury bills would make a serious impact the value of other countries’ holdings.

So far, there are no signs of China pulling out its money en masse, but there is no doubt an easing of China’s appetite for US holdings. The US Treasury released figures showing China increased its Treasury holdings by a mere $4.6 billion between January and February 2009, maintaining a slowdown in China’s appetite for U.S. government securities since the financial crisis hit. Earlier this month, China’s central bank released figures for the first quarter this year showing its foreign holdings increased by $7.7 billion, considerably less than the $153.9 billion surge during the same quarter last year, according to the New York Times.

Dominguez added that China’s investment philosophy prevents it from rocking the boat because the government is more worried about the issues that could arise twenty years from now. Despite its pace of growth, China continues to face many domestic challenges, such as the growing disparity in wealth, a growing population of senior citizens, and potential social upheaval from greater masses of unemployed workers affected by the downturn.

Besides, where else will China put its money? The US Treasury remains a safe haven during these challenging times.

For now, both countries face an urgent need to bolster their economies, and both have launched massive stimulus packages. It remains to be seen whether this cycle of cheap imports and cheap credit needs to change. What’s certain is that the US and China remain reluctant dance partners who can’t find a suitable replacement among the crowd.

Great things can happen during the most challenging of times. It may seem difficult to find a silver lining during the worst economic downturn in more than a generation. But if you’re out of a job, or fear your job is slated for the chopping block, retreating into paralysis will do nothing to speed our economy’s recovery. So this is a perfect time to turn a new page in your career and embrace the vast possibilities of reinvention.

Think about it this way. Circumstances outside of your control have forced a lot of free time into your schedule, giving you many options to choose. Learn to exploit this opportunity to strengthen your skills, sharpen your mind, and prepare yourself for your next job. Take it from someone who has gone through two layoffs in a year—once you get over the setbacks of unemployment, turn your attention to the opportunities around you. Maybe you’ll discover a new calling in life that will bring greater personal fulfillment. “The Chinese symbol for crisis includes both danger and opportunity,” said Steve Vislisel, a career consultant with Plan C Partners. “Most people focus on the danger. Be one of the few courageous souls who focus on the opportunity.”

When you are unemployed, there’s one commodity you have in abundance and that’s time. So learn to maximize that time in the following ways:

Network, network, network!

Your personal network is your best asset for finding the next phase of your professional career. With your days free to schedule lunches and meet-ups for coffee, this is the best time to renew acquaintances that you may have let languish when you were working. Consider your vast database of friends, teachers, business partners and colleagues. They are all sources of knowledge and ideas to help you evolve your career and connect you to potential employers. Find them on Facebook and LinkedIn, or send them emails suggesting that now might be a good time to get together. Chances are, a good 90 percent of the people you contact will agree to meet you as long as you position the meeting as a casual conversation to tap their career advice. During your meet-and-greet, remember three things: 1) Your contact will chatter away because people love to spread career wisdom, 2) don’t just tell them what you want, ask them what they need and think about yourself as a solution, and 3) be sure to leave every meeting with a few referrals.

Another approach is to meet people through conferences, gatherings, and social events. Recently I attended a gathering for the unemployed called LaidOffCamp, an all-day event for people to meet, share tips and exchange business ideas. I didn’t meet many employers, but I felt a sense of solidarity with others in my situation. Check out the website because there may be a LaidOffCamp coming soon to a city near you.

The Product Called “You”

Who are you? What do you want to do? These two annoyingly broad and existential questions form the foundation of your career strategy. Think through your answers, because everyone you talk to will ask them, and you don’t want to respond with silence and a confused expression (I speak from experience). I’ve learned that the ideal job blends the things you enjoy doing with things you’re good at doing.

Because you’re selling who you are, consider yourself to be a product that requires some branding and marketing. That begins by understanding what makes your brand unique, and then articulating that message to the people in your network. Don’t just consider your skill set or the functions you may have performed in a previous job. Much as it might pain you to admit it, those things are easily learned. But what can’t be taught in school or picked up on the job are the unique qualities of your personality and the innate values that define who you are. Those qualities can guide you to the job you’re looking for, and alert you against jobs that will be a bad fit.

Mental and physical fitness

Stagnation is the greatest enemy of the unemployed. After years of sitting in front of a computer for 10 hours a day in stale offices, you’ll fall in love with your brain’s ability learn new things. Watch artsy films. Read books. I always wanted to take classes in economics and financial planning, so I enrolled in Stanford University’s night program. They were fascinating and they helped me consider new areas for growth.

The same thing holds true for physical fitness. Yes, it’s great to sleep 10 hours a day, but lunch shouldn’t be your first meal. To keep your body moving you need to move it. If you’re not an exerciser, start with modest stretching and introduce a daily walk around the block. I take short jogs or walks in the afternoon to help me remove mental clutter and reprioritize my list of to-dos.

Learn to manage your money

For most of my career I thought budgeting was for those goodie-goodies who studied on Friday nights in college. After my first layoff, I poured my attention into learning the essentials of personal finance and disciplined budgeting. I became a number-crunching nerd, keeping track of every expense and figuring out creative ways to save money. I realized I was spending a lot on useless crap and eating out all the time. Once I understood my buying patterns, I made smarter decisions to save for a rainy day.

Serve Others

There’s no better way to gain perspective about your situation than pouring your energy into helping people. It’s human to give without expecting something in return, and it brings perspective on what really matters in life. I recently volunteered for a food distribution center and had a great experience talking to people going through tough times. There’s something human about handing food to people in need. Here are some good sites as a starting point: HandsOn Network, Volunteer Match, One Brick, USA Service.

For more of Jim Hu’s writing, visit his blog Gloom to Boom.

Scared yet? It seems like everything we read about the economy is either bad or getting worse. The measurements of economic health reveal a patient that requires a stint in the I.C.U. and some time to heal. Luckily, the prognosis isn’t terminal. The American economy is resilient, and since the 1960’s economic growth phases have dwarfed periods of recessions. So if you believe in history, what goes down eventually goes up. The big question is when.

“I think we’ve got at least another 12 months to go,” says Jim Howell, an economics professor at Stanford University’s Graduate School of Business. “If we finish by the end of 2010, that would be a good outcome.”

The problem and solution for the economy revolves around lending and spending. Lending is the lifeblood of the economy, and today the credit markets have slowed due to fears that borrowers won’t pay them back. Without credit, businesses cut back on spending and lay-off workers. Consumers who lose their paycheck stop shopping, forego buying new cars and put their vacations on hold.

Stopping this cycle involves some intervention and some psychological assurances. Forces such as the $787 billion stimulus package are attempts to get the economy flowing again. But the turnaround can’t happen until businesses and consumers feel confident enough to spend.

“When people get a better feeling that we’ve hit bottom… then they’ll change their behavior slowly,” says Howell.

In the meantime, Howell is looking for signs that we’re on the road to recovery. While that day may not arrive for many months, here are his five leading indicators:

1. Bank nationalization

Over the past few weeks, Howell has “reluctantly” endorsed bank nationalization as the solution to thaw out the credit market. He’s not a fan of nationalization, but he does believe drastic measures are needed to fix the system. Before you jump to conclusions and call Howell a socialist, remember that he sees bank nationalization as a temporary and necessary solution not a permanent panacea to the problems of capitalism.

“I want government to take over the banks and throw out all the bankers,” says Howell. “Get rid of all the bad loans and clean up the banks. Then sell them to people who meet some criteria about being reasonably honest.”

2. Confidence in the stock market

Right now the bears are leading the pack and the bulls are on the retreat. Investors are licking their wounds and are skittish to bet on the market. When big investors restore their confidence in the market, you can bet that’s an indicator the tide is turning.

“If you see people with lots of money beginning to dabble in the stock market again, that’s a good sign.”

3. Small businesses

Think small. While lots of attention is focused on large industries such as the automotive industry or the retail sector during a recession, it is actually the viability of small business that can be one of the most important barometers of the health of the overall economy. Just check out main street. Are local businesses closing down? Is your favorite restaurant struggling to fill its tables? A turnaround may be happening “when you see them beginning to pull down their ‘for sale’ signs and begin to advertise,” says Howell.

4. Jobs for college graduates

Yes, unemployment rates are the highest they’ve been in 15 years and every day brings news of another company laying off workers. But the real test of the strength of the job market is whether businesses are recruiting college graduates into their first job. When that happens, you’ll know that they have moved beyond survival mode and are investing in long-term growth.

5. Value of the dollar

How’s the dollar doing against foreign currencies? If it goes up, it probably means the world is beginning to believe that our economy is changing for the better. And if they believe it, then we should too. The world markets are not always right, but “they’re probably right four out of six,” Howell says.

For more of Jim Hu’s writing, visit gloomtoboom

One clue to the cyclical nature of boom and bust can be found in this chart, which indicates how long previous recessions have lasted. While no one is suggesting we just wait it out and strong measures are clearly indicated, we can all take some comfort in the knowledge that time is on our side when it comes to ending the recession.