Economic Downturn in China As The Threat To The Global Economy

At the moment, Chinese economic enters the downward stage as its growth has slowed down to the extremely low level, which may be as low as 5%, compared to its previous growth within the last twenty years, when the annual economic growth often reached 20%. Such economic downturn in China is as dangerous for the global economic as it has never been before because of the changed role of Chinese economy in the global economy.

Background

Today, Chinese economy plays an important part in the economic development of the world and the global economy relies heavily on the situation in China. China is one of the largest exporters in the world. What is more important many developing countries depend on the economic growth of China because their national economies depend on export to China as the major importer of their products and services. Developing countries are the major suppliers for Chinese manufacturing industries which have faced the most severe downturn recently ().

Impact on other countries

However, developed countries cannot stay unaffected by the crisis, if the situation in Chinese economy keeps deteriorating. At the moment, the US’ economic growth is to slow to ignore the economic downturn in China and respected decline in the economic growth of developing countries (). The US is still recovering after the economy recession of 2008 but the growth of productivity and business activities is insufficient to compensate the downturn in China and developing country to keep the global economy growing. In such a situation, the EU and Japan manifest similar trends because, even though they have managed to stabilize their economies, their economic growth still is not fast and high enough to let the global economy grow, in case of the deterioration of the situation in China.  

Impact of economic globalization

In addition, the close integration of China, the US, the EU, Japan, and other developed and developing countries into the global economy make them dependent on the situation in international markets. This is why they are very sensitive to economic crises in the major world economies, including that of China. Chinese economic downturn may trigger the decline of business activities internationally and such decline will affect not only developing countries but also developed ones because the domestic consumption alone cannot compensate the global consumption. Therefore, the decline of Chinese economy will have negative effects to the global economy.

The changed role of Chinese economy in the world

Such a great impact of Chinese economy on the world economy is the result of the changed role of China and its economy in the world. The fast growth within the last couple of decades has made China one of the major economic powers in the world. Investors from all over the world invested into China. Many companies from developed countries moved their production to China and invested into the development of the local production. Developing countries have  become dependent on Chinese economy because China became the main importer of their goods. Hence, their economies are oriented on China mainly and the decline of Chinese economy inevitably leads to the decline of their domestic economy because the economic decline decreases the demand on their goods that lead to the decline of production and economic downturn.

Conclusion

Thus, the development of effective policies in China are essential to prevent the further decline of Chinese economy and global economic downturn because Chinese economy has become a significant power in the world that other countries just cannot ignore anymore. Both developed and especially developing countries would suffer, if Chinese economy slipped to the deeper crisis.

Works Cited:

Sharma, R. A global recession may be brewing in China. The Wall Street Journal, 2015. Web. Accessed October 12, 2010. http://www.wsj.com/articles/a-global-recession-may-be-brewing-in-china-1439764500

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 28, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
close
Haven't found the right essay?
Get an expert to write you the one you need!
print

Professional writers and researchers

quotes

Sources and citation are provided

clock

3 hour delivery

person