China Mired in Economic Downturn

By Carl Koenemann

• Recent economic indicators coming out of the second largest Economy on the globe have demonstrated that the nation’s economic growth has stagnated. This economic draught can be linked to China’s steep decline in industrial production growth, and a troubling downturn in the real estate market.

• The economic growth is just 6.9% for the last year, which is the lowest rate of growth for the Economy since the recession in 2009. Major financial institutions such as Barclays and RBS expect the Chinese economy to come short of its targeted growth by as much as .3 % point for this year.

• This deceleration in the Chinese economy is occurring at an unfortunate time as the rest of the world’s economy is also stumbling. The US recovery has not been nearly as robust as expected, and the European economy is mired in economic turmoil.

• The world is desperately searching for growth somewhere, and China is no longer capable of being the sole provider. Many experts are predicting that the Chinese authorities will have to make the decision whether or not to take stimulus measures to promote growth or try to simply survive the downturn.

• Small and large Chinese owners are complaining that the current economic conditions are the worst they have seen in decades. Particularly,Sun Suqjong of Beijing talks about how his workers sit in his shop with nothing to do as his customers have dwindled recently, and holds uncertain expectation on the future of his country’s economy.

• he economic data from August only corroborates Suqjong and other business owners’ worrisome observations. The real estate drought that has plagued China in the last few quarters has begun to spread to other sectors of the economy.

• Housing sales and construction decreased almost 11% in the month of August alone. Additionally, industrial activity has fallen as the demand for Chinese-made goods from the international community has slowed down recently.

• The world’s eyes currently rest on Chinese leadership hoping they make sound enough decisions to weather the turbulence and to return the nation’s to it’s position as the world’s fastest growing economy.

• We can’t expect China’s Gross Domestic Product to grow at an incredible 10% per year, but we can hope that they continue to experience robust economic growth going forward. Such growth may be necessary to help maintain the world’s slow recovery from the financial crisis of a few years ago.