Chinese economy and its impact on global growth
The Chinese economy is one of the prominent driving forces behind the global economy. China has always made significant contributions towards the growth and rebalancing of the world. However, of late there have been several reports in the media that indicates that the Chinese economy has been slowing down, specifically in view of the rising trade related wars going on between China and the U.S. Continue reading to learn more about the impact of China’s economy on global growth & advancement.
China’s Impact on Global Growth
The IMF (International Monetary Fund) has been issuing repeated warnings indicating that the existing trade war between China and the United States will have global repercussions. China’s economy grew by 6.7% in the 2nd quarter of 2017, which was the country’s slowest recorded growth pace since the year 2016. It must be noted that the key figures pertaining to the growth of investment as well as industrial production slowed down in the month of June, whereas retail sales was up.
These figures indicate that the Chinese economy has slowed down moderately even as the United States led trade spat has just commenced. The United States President Donald Trump has already announced tariffs on the 34 billion dollars imports that were initially made through China. In fact, Trump is also planning to announce levies that would be applied to another sixteen billion dollars of imports. Additionally, the President has also threatened that he would expand the tariffs further. On the other hand, China too is threatening and may retaliate all over again. This in turn would not only affect the Chinese economy, but would also have a lasting impact on the world economy.
If both China and U.S. don’t come to any conclusion in the next couple of months, this conflict shall continue to increase further.
The fact that the problem has already become a matter of global concern was quite evident at the summit that took place between China and the EU leaders in Beijing. The representatives of both the countries were very clear that the current trade spat could result in a huge conflict, which would eventually benefit none. Economists are worried about the ongoing spat, since China plays a major role in the global and regional supply chain network that further provides U.S. with goods & services. According to them the spat would affect countries globally. While, China is trying to attract increased foreign investments, the United States government is creating hurdles in raising foreign investment as well as other issues with regard to global supply chains and shipping companies. Economists fear that this may further alter the flow of businesses globally.
A report by Morgan Stanley revealed that if the United States implemented the tariffs on imports worth 250 billion dollars, then it would have a major impact on the growth of the Chinese economy that would drag it down by almost 0.3%. Besides, China may also get hit indirectly owing to the supply chain problems, which may further deduct additional 0.3% points from the country’s growth.
In a nutshell, if the trade spats continue or worsen, then it is likely to impact both China as well as the global economy.