why should we worry about economic growth in china?

Why Should We Worry about Economic Growth in China?

By www.TraderNewsAndReviews.com.

www.TraderNewsAndReviews.com

What happened to the Chinese economic miracle?

In the land of “managed capitalism” all is not well as economic growth slows.

Why should we worry about economic growth in China?

It is one thing if the economy of a small country tanks.

But what if the second largest economy in the world heads crashes?

What happened and how will trouble in China affect your investments?

The New York Times writes about how China fell off the miracle path.

For years now, Donald J. Trump has been sounding the alarm on China, calling it an economic bully that has been “eating our lunch.”

The crux of Mr. Trump’s attack is that Beijing manipulates its currency to keep it cheap and give Chinese exports an unfair advantage.

But that narrative is so last decade. China is now a threat to the United States not because it is strong but because it is fragile.

Since the 2008 financial crisis world trade has fallen sharply, national debts are up substantially and countries are going back to autocratic rule with self-destructive consequences.

In all of these categories China leads the pack.

Adding to China’s worries is the shrinkage of its working age population due to the one couple, one child policy.

For years China’s economy grew at 10% or more and its purchase of raw materials from around the world was a boon for developing nations.

China claims that its growth is in the 6% range but many believe that 4% is closer.

In order to maintain growth China is running up its debt funding poorly thought out projects.

The end result is an acceleration of their debt which has hit 249% of its GDP.

Why again should we worry about economic growth in China?

Risk to Global Markets

Investor’s Business Daily describes China’s multi-trillion Yuan debt as scary.

Slowing growth amid rapidly escalating debt has troublesome implications.

Much of the credit is going to unproductive uses and propping up bad debts.

The longer that continues, the bigger the eventual debt implosion may be.

A China debt crisis would ripple through the global economy.

Commodity producers that rely on China demand would buckle.

Global financial markets would see a stampede away from emerging markets and risk generally, exacerbating the direct effects of a China hard landing.

U.S. Treasuries, gold and other traditional safe havens may fare well, but not much else.

China is an old hand at covering up its problems and hiding the true facts.

The International Monetary Fund estimates that around 15.5% of commercial bank loans totaling $1.3 Trillion are at risk in China.

15% to 19% of outstanding loans are nonperforming according to estimates from Hong Kong and this could go as high as 25% which is nearly twice the IMF estimate.

So, Why Should We Worry about

Economic Growth in China?

As Chinese orders for raw materials fall off developing economies across the globe suffer.

They in turn will buy less from US exporters.

In fact, Reuters writes about underlying weakness in U.S. manufacturing.

When no one offshore has any money and lots of debt no one buys U.S. products.

China could end up selling off all of its US treasuries in a last ditch effort to prop up the Yuan.

And as a last result China could resort to military adventurism in an effort to drum up patriotic support back home as the economy tanks.

For more insights and information about trading,

www.TraderNewsandReviews.com

why should we worry about economic growth in china?

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