The Slow Down In China And Its Global Impact

Whats Actually Happening?

China is expected to account for almost 19 percent of global economic activity at the end of this year. This, coupled with the fact that it is the second largest economy in the world, makes the world more vulnerable to a slowdown. Many people point out the outgoing trade war between china and the US for its downturn. But there are many other reasons behind the phenomenon. This downward trend can be attributed to the diminishing effectiveness of several key contributors such as the rising quantity and quality of the labour force, the more efficient allocation of resources and investment capital, the rapid upgrading of technology, as well as sustained high export growth, which fueled the country’s spectacular growth in the past three decades.

China’s overall debt also jumped to 300 per cent of GDP by 2018, up from 164 per cent in 2008 in order to shift the economy from that of investment based to aconsumption based one. This increases the exposure to bas loans fuelled by the shadow banking system. The real estate market also has shown sign of a slowdown due to the huge supply-demand gap. All of these factors could spell trouble for the country which has been assimilated so deeply into the global economic system that any potential signs of deceleration could spell trouble for the whole world.

• China recorded a GDP growth rate of 6.6 per cent for the year 2018, its lowest since 1990.
• China's slowdown makes its trade partner vulnerable as well. China is a prominent market for export from South Korea, japan, and the ASEAN nation.
• Countries dependent on commodity export, such as Australia, Brazil, Canada, and Indonesia, could also be impacted.
• Softening demand in china is also being felt by companies around the world. Slowing sales of goods from iPhones to automobiles have promote warning from the likes of Apple and Jaguar Rover PLC.
• China is the world’s biggest automotive market, but sales have fallen for the first time.
• Half of all the world’s steel, coal, copper, and cement is imported by china. A fall in demand is likely to impact global commodity prices.
• For India, its exports of raw material to chin could suffer. A weakening Yuan could also make the Chinese import even cheaper, potentially leading to the dumping of Chinese goods in country.

Latest Updates

The on going Trade War between US and China as already cost US economy $7.8Bn. Over the past year, The US and China has placed tariffs on billions of dollars of one another's goods  - a trade war that has contributed to the slowdown of the global economy.

Reports say that Washington official will make a visit to Beijing next weak and have a face to face conversation with the Chines related to the topic.