China after the recession

7 Feb

The 2008 recession had dramatic impact upon the ‘global west’, but had a much less distinctive effect on China. Since the recession, China has excelled, increasing output, economic growth, and employment, but is this coming to an end? China’s economy is considerably slowing down, experiencing unexpected economic difficulties. Global investors are becoming unnerved, real estate prices are dropping, and even manufacturing isn’t showing positive signs. China’s export growth has plunged to barely above zero, and Chinese stocks have taken an intense turn for the worse, becoming available at cheap prices. The economy was 8.1% larger in the first quarter of this year than a year earlier, but most of that growth took place last year, showing the concern for the Chinese economy in global markets.

There is speculation that China will hit the ‘next big recession’. However, unlike the west, China has the potential to stop it before it becomes too severe. The real estate market is already in decline, but should investment endure, then there is potential to save China’s markets. Furthermore, there is further evidence suggesting China is already in a recession, but is more resilient than the west, showing potential for survival.

Should China continue to deepen into a recession, then there is potential for severe consequences globally, seeing as it remains the largest importer of consumer goods, iron ore and copper.

Sources:
After barreling ahead in recession, China finally slows : http://www.nytimes.com/2012/05/25/business/global/chinas-once-hot-economy-is-turning-cold.html?pagewanted=all&_r=0

Global slowdown predicted after deluge of bad economic data: http://www.guardian.co.uk/business/2012/sep/20/global-slowdown-predicted

Is China in a recession?: http://www.forbes.com/sites/investor/2012/05/23/is-china-in-a-recession/

China can’t hide the recession any longer: http://www.forbes.com/sites/investor/2012/10/16/china-cant-hide-the-recession-any-longer/

Advertisements

3 Responses to “China after the recession”

  1. ags2g09 February 10, 2013 at 7:33 pm #

    It seems only logical that at some point, what has been described as a ‘global’ recession would hit China. Chinese output was always going to decrease, because those providing the ‘input’ have been struggling themselves. The input will always fall before the output notices the effect (since obviously selling figures do not fall before buying figures) – perhaps, then, some economic difficulty was within the realms of expectation.

    The effects of a recession are cyclical. Global investors are influenced by the economic downturn closer to home, and as a result become less inclined to invest their money at all. This, in turn, weakens the Chinese economy, starting the whole cycle again as global investors regard such a weakness as sound reason not to invest.

    For Chinese authorities to be able to claim that export growth is at all above zero is arguably an achievement considering how the recession has affected the powerful Western countries. In fact, in an article published by Reuters at the close of 2012, the Chinese export figures were lauded as ‘eight-month highs’, ‘higher than expected’, and representing a ‘deepening revival in the world’s second-largest economy’.

    Just as a recession is cyclical, so is it relative. China is the largest importer of consumer goods, iron ore and copper. If the recession hurts China, the level of importing will clearly change, but the status of China as the top importer will not – less goods are being produced, so less goods can be bought. This problem can arguably only be solved through more investment – which, as I have described, is unlikely to happen while such a fear exists.

    The cycle continues. Breaking the vicious circle is the only way to progress. How do we do this? Well, if I knew the answer to that, I wouldn’t be in a position to write this comment.

  2. de1g11 February 11, 2013 at 3:55 pm #

    What options do China have to prevent a recession occurring. China currently holds the majority of the American nations debt. If this debt is sold off to prevent a Chinese recession then China forces America to be incapable of buying their goods. Other options could be investing heavily in its internal market, but with over 50% of its population being agricultural labourers the returns may not be large enough or rapid enough to work.

  3. ljp11g11 February 12, 2013 at 10:13 pm #

    Some economists have suggested that China could soon have the largest economy in the world, therefore if the country were to suffer a severe recession the effects would be felt all over the world. Although China is the world’s largest exporter, it also imports a large amount of goods, for example in 2009 the amount of US goods China imported increased by 14%. This shows that if China were to fall deeper into recession, their demand for exports would fall and western countries such as the US and UK could see a decrease in economic growth as a result of this. Exports to China only account for a small percentage of GDP in countries such as the US and the UK and could not be the sole factor in causing economic slowdown in these countries, however this does highlight the affect a slow in growth of the Chinese economy could have on the rest of the world.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: