The article goes into great detail regarding the
effect china has in terms of being a regional economic power house. It gives an
in depth comparison of how in five year China has gone from a nation growing at
an annual rate of 10% on average for the past 30 years to 7.5% in the previous
two years. Even though 7.5% annual growth is very good compared to other
countries, but; still a downgrade for China. Its coal imports have gone down
drastically. Low growth has had a negative effect on Asian Economies that have
relied on China for higher exports. Major examples of these are Taiwanese
machine tool makers who have seen a drop in exports to China by more than 20%
since 2012. Australian iron has hit its lowest price in around 21 months.
Jewelry sales have gone down in Hong Kong by 40% this year.
In terms of the Chinese economy, consumption is
finally edging out investment as the main element. Household consumption has
grown from 34.9% in 2010 to 36.2% of the GDP last year. Even after the mini-stimulus
introduced by the government this year, consumption has accounted for more than
half of the Chinese growth.
This rebalancing has had an effect on various
other economies. With 1.95$ trillion in imports in 2013 China became the second
largest importing nation. For example Taiwan’s exports to china went up by 15%
in June for a year earlier. However; more at risk are countries that export
commodities and capital goods such as heavy machinery to China. Such as
Australia will lose about 0.8% points if Chinese investment goes down any
further. Which goes to show the impact of economic fluctuations in China as a
regional power house.
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