China’s Sluggish Economy and what it means for the Global Economy
By admin October 20, 2015



China is the world’s second largest economy and for many years was the fastest growing economy in the world. Between 2003 and 2007, during China’s boom years, China was experiencing an average GDP growth rate of 11.7%. On Monday, however, China’s National Bureau of Statistics released data indicating that China’s economic growth dropped to 6.9% from July through September in comparison to the prior year. This is China’s slowest growth rate since the global recession of 2009.

According to the International Monetary Fund (IMF), China’s GDP growth has decelerated for four straight years and will likely keep slowing through 2017. Beijing has recently made reforms designed to shift China’s economy away from relying on investments in infrastructure to a consumer driven economy. That being said, analysist have already expected China’s growth to slow during this adjustment period. Economist say that China’s economy is still strong enough to maintain employment levels but will need incremental stimulus measures to keep its growth around 7%. However, a sluggish Chinese economy has already effected the global economy.

While China’s economy surged for the last two and a half decades, China alone consumed much of the world’s resources. China purchased nearly 50% of copper, 54% of aluminum, 50% of nickel, and 45% of steel, according to the World Economic Forum. Emerging economies, rich in natural resources, have relied heavily on the strong international commodity prices and a robust China willing to purchase their exports. However, China’s recently contracting economy has plummeted commodity prices and China has cut back on their purchases of exports. This has caused a global commodities bust and hindered the growth of various developing countries.

According to the Standard & Poor’s GSCI commodities index, commodities prices have dropped 37% in the past year. This has effected countries like South Africa and Zambia that depend on coal exports to China. Chile has also been effected due to their dependency on copper exports. Moreover, the International Monetary Fund lowered the projected growth of emerging and developing economies to 3.1%, which also happens to be the weakest growth rate since the global recession of 2009.

The Chinese President, Xi Jinping, has acknowledged the effect that the Chinese economy has had on developing countries. According to Jinping, “As an economy closely linked to international markets, China cannot stay immune to the lackluster performance of the global economy.” Jinping went on to claim that he is concerned about the Chinese economy and that his administration is working on addressing his concerns. The Chinese government is expected to unveil its five-year social and economic plan for 2016 to 2020 at the annual meeting of the Communist Party later this month. Analyst are watching Beijing closely to determine what measures the Chinese government will take to increase their GDP growth and how those measures will affect the global economy.


For More Information:

Thanks for sharing !

Comments are disabled.