China

Impact of slowdown in Chinese economy

Impact of slowdown in Chinese economy

Readers Question: If there is a significant slowdown in the rate of Chinese economic growth – how will it affect the UK and other global economies? Summary The Chinese economy has been growing very rapidly, and is now one of the biggest economies in the world. The size of the Chinese economy means it has a significant effect on global commodity prices and global trade. In 2013, China’s GDP was 12.5% of the world economy. A slowdown in the Chinese economy means a fall in the rate of economic growth. This…

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Impact of Chinese stock market crash

In recent months, the Chinese stock market has been very volatile, with sharp drops in prices since last July. On August 24th, share prices fell 9% – one of the biggest single day falls. People fear this is the bursting of the Chinese stock market bubble which could have serious effects on the global economy. Possible effects of a Chinese stock market crash include 1. Reduced exports In recent years, China has seen a rise in consumer spending. Consumer spending has been growing at 10% a year. This is an important source…

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Threats and opportunities of Chinese growth on UK economy

Readers Question: Hello I recently saw a programme How China Fooled the World – with Robert Peston and I was wondering what threats and opportunities does the growth of economies like China and India provide to the UK economy? According to the IMF, in 2010, the Chinese economy was $5,878 billion – second only to the US economy. If we use GDP at purchasing power parity (PPP), the size of the Chinese economy is estimated to be even larger, at around $10,119 billion. China also has a growth rate, averaging close…

What happens if China sells its dollar assets?

What happens if China sells its dollar assets?

Readers Question: “As for the argument that China can always use its foreign exchange (forex) reserves to provide further stimulus to prop up the economy, the people who purport this have little knowledge of basic economics.  If China were to use substantial forex reserves in this way, it would become a large net-seller of U.S. Treasury bonds. To prevent a spike in interest rates, the U.S. central bank would have to significantly step up purchases, funded ultimately by private citizens savings. Less of these savings would dampen U.S. consumption and ultimately,…

Will China challenge the West?

Will China challenge the West?

Readers Question: 1. Does state capitalism as practised in China pose a fundamental challenge to the Western model of liberal-democratic capitalism? No, I don’t think so. From a political perspective, no matter how economic successful China might be, there will never be any enthusiasm to replicate China’s one party political system. In fact, it is most likely to be the other way around. Increased economic living standards in China are likely to cause increased demand for political and democratic freedom within China; there is already growing resentment at…