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The coming depression blog | June 24, 2019

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Global Fears of Economic Slowdown in China

Global Fears of Economic Slowdown in China

The rate of economic growth in China over the last few decades has been absolutely phenomenal. It has become a global economic superpower and a major manufacturing hub in the last few decades. There have been some phenomenal growth figures coming out of China for the past few years with even double digit growth rates recorded annually in the country. However this growth rate is now showing signs of a slowdown which is seen as a major concern in China and also all over the world. Today world economy is truly globalised and with China being a major exporter and also a major market, this slowdown has given rise to concerns throughout the world.

Production & Manufacturing
There is a concern in China that the rate of manufacturing has gone down. Economists are concerned that as manufacturing goes down, the import of a large number of ancillary products from emerging markets needed by Chinese industries may go down. As China is a top importer from emerging market economies, this will affect many countries in Asia, South America and Africa. The problem with Chinese manufacturing is that it is slowly losing its cost advantage due to a strengthening Chinese currency and increase in wages for blue collar employees. As Chinese people lead better lives their demands also increase in terms of commodities, food and other daily products. That is helping import bills of China to rise.
Chinese Growth Slowdown
In the recent past, investment growth has slowed down in China. Another major concern in China today is environmental protection. Due to the large growth that the country has seen in the last few decades, pollution and environmental degradation has been a serious challenge in China. The authorities have had to make some serious reforms in the environmental laws, which in turn mean that for growth to succeed the industries cannot flout environmental laws.
Global fears are that this slowdown may persist if not worsen and that can have damaging impacts on many key areas of world economy. These include investments, economies of other countries that are dependent or do business with industries in China (which include both developing and developed economies). It may impact the overall progress and growth of the world economy. Many analyst expect a slowdown in Chinese growth rates for the next few years, though in comparison to many other economies it is still expected to do quite well, if not phenomenally well in the next few years.

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