The Ripple Effect of China’s Economic Slowdown

China’s economy, the second largest in the world, has been observed to be experiencing a significant slowdown in recent years. It grew by merely 6.7 percent during the second quarter of 2016 which is relatively low compared to its growth rate earlier in the decade.

The main reasons identified for this economic slowdown are theballooning debt of China and its national government’s aim to shift its economy from one that is dependent on exports and investment to one that is led by consumption and service provision. Other factors include China’s rapid economic growth in the past years that has now reached a plateau or a downward slope, the country’s technological gap from other developed countries which is affecting its productivity, and a lot of other minor factors that add up to become key influences on the economy’s decreasing growth rate.

Many deem this economic slowdown an international problem because of its possible effects on the economies of other countries especially those nearest to China. Hong Kong, Taiwan, and Macau are among those that are seriously affected because their retail sales, tourism, and export markets are not doing as well as before because of China’s economic problem.

Other countries with economies reliant to China are also affected by the slowdown. The problem is dragging the global output because China is one of the biggest importers of different goods from other countries. As a result, the economic growth of other countries also slows down. In the case of South Korea, China is one of its biggest importers, and the country’s economy can also feel significant effects. The same situation may be observed in Australia, Brazil, and Canada which have economies that are also highly dependent on their exports to China. 

Economists predict that the economic slowdown will continue until the end of the year. They predict that by the end of 2016, the country’s economy will only achieve 6.5 percent of economic growth or even lower. They add that China’s economic problem may also affect 2017, and that countries should expect a ripple effect on their economies. In the coming years, the global economy may need major adjustments since one of its main players is experiencing major instability.