Monday, April 11, 2016

From Australia to Zambia, China's economic slowdown delivers a world of hurt




The article was published by US News and written by the Associated Press. Theme of the article focused on China’s recession and how it affected the counties of Australia, Zambia, Chile, and Indonesia. Each of these countries have been affected by China’s quick downfall by lowered commodity prices, higher unemployment rates, and lower home prices. Since China has been accounted for percent of global growth in 2014 its not surprising to me that global economy is going to take a hit from this, just like global economy took a hit when US market crashed in 2008. China is steering away from exports, and is looking to increase capital domestically through consumer spending. So this affects countries that export raw materials to China.

            Australia has a heavy investment in exporting to China. Even when the US market crashed, Australia was able to sustain due to vast exporting of iron, coal, and coal to China used in their factories. Once China decreased investment of raw materials prices of Australia’s raw materials dropped, “price of iron ore from a peak of $185 per metric ton in 2011 to below $60…every 1 percent drop in China's investment shaves 0.2 percentage point off Australia's economy.” In the long run that 0.2 percentage drop will begin to add up. The other countries dealt with the same problem of their raw material prices dropping due to China decreasing imports. This goes to show how much China affects the global trading market
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1 comment:

  1. AnonymousApril 11, 2016 at 9:48 PM

    By the sound of this article, China has their hands in many operations run by foreign companies, and the long term effect of this may have adverse effects on the employment of these foreign companies. If materials become harder to acquire then these companies will have to look elsewhere however China has been such a mainstay for raw materials so the search might be long because of negotiating for new deals with other countries over the use of raw materials. I think with the right active policy China can work themselves out of this funk and get back to normal operations.

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