Tuesday, December 3, 2019
Hit hard by the trade war, China’s economic outlook is uncertain – except for one thing: growth is sure to decline
This article talks about China's side of the trade war. It's main focus is on how the Chinese economy, which is based on the amount of trade they have, has slowed drastically in the past year, from 6.8% to 6%. While that may not sound like a large number, when you put into perspective with how large the China economy is, the entire global economy has been slowing down as a result. The article also talks about when their economy does get below that 6% number, this will impact consumer confidence so it will likely slow down at an even harsher rate if nothing is done to fix it. What could the Chinese do in order to prevent this from happening? Or if it does happen, what will they have to do in order to get back on track?
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Growth may be sure to decline, but as we've spoken about in class, every economy eventually slows down. With China implementing a one-child policy, their population has steadily decreased. This has allowed their standard of living and GDP per capita to increase. Therefore, growth for a bit of time was high and eventually it will come back down in order to get into a steady state.
ReplyDeleteThe flight to urban cities in China was what caused their massive economic growth as they were significantly contributing towards their total factors of production as more workers were coming in. Now that they have almost maxed out their productivity, along with trade tensions, it has fallen. The market will eventually adjust back towards the steady state as Ashleigh has said.
ReplyDeleteI agree, I think the growth slow down was expected, but going from 6.8 to 6 is still a significant jump. I don't know how large or quick of a jump was really expected. One of the interesting things that you point out is that is growth seems to be slowing too fast CC could see a decrease as well. I think that could pose the threat of a pretty bad negative feedback loop. The Chinese will some how have to figure out how to mitigate the negative reception of decreasing growth and assure the population that it is par for the course.
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