China’s Economic Slowdown: How It Affects Global Economy

The slowdown in China’s economic growth – its slowest since 1990 according to the BBC – is causing consternation in economists everywhere.

Slowing doesn’t mean stopping. China’s 2018 growth was 6.6 percent, but that growth is slower than it has been, exports are falling, and recent news like weak Apple sales in the Chinese market has impacted on share markets.

China has been making efforts to halt the slowdown with small business tax cuts and increasing public spending, though these efforts may simply add more to China’s debt.

BBC’s Karishma Vaswani has warned that slow growth in China means slow growth for everyone and The Age reported on 24 January that debt crisis expert Professor Ken Rogoff thought the Chinese downturn wasn’t a carefully managed policy but an economic disaster waiting to happen.

Over on Bloomberg, Adair Turner, chairman of the Institute for New Economic Thinking, has also made it clear that the China-US trade war has derailed China’s efforts to rebalance its economy away from debt-financed investment.

The South China Morning Post’s Patrik Schowitz doesn’t have any better news for the market – he warns punters to be wary of any short term surges arising from stimulus measures by the Chinese government because things are likely to get worse before they get better.

Is it as bad as all that? Well… maybe.  Several of the experts in the quoted news reports feel that China will be able to stabilise its economy, perhaps in the second half of 2019. Until then, it’s a matter of keeping attuned to events and waiting to see if the China-US trade war comes to a resolution.

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