A survey of 30 economists resulted in 57 percent of them noting that as China’s economic boom decelerates, it will take other economies with it. Brazil, Australia, South Korea and Chile are just a few that will be majorly affected. For years, China has consumed iron ore, oil and other commodities from developing countries at a fantastically high rate. And on the flip side, enjoying the spoils of a rich economy by enjoying luxury items and cars from European countries.
China’s explosive economic growth is seeing a slow down for many reasons. One is the government’s attempt to shift it’s economy to be more consumer based. It is also trying to curb the speculative real estate market within its borders. With only a 7.2 percent increase over the third quarter last year, it marks the country’s lowest increase since 2009, even if that amount of growth is nothing to scoff at. Most countries can’t even begin to dream of increases of that size. And other countries are starting to notice. To note a few – copper export is down in Chile and oil and lumber export is down in Indonesia. Electronics exports are down in South Korea.
The local Chinese population is seeking out cheaper, local alternatives. The government is also putting a strangle hold on wide spread corruption. Corruption meaning outside sources of goods such as Mercedes-Benz, BMW and luxury Swiss watches.
Lucky for the US, only 6.5 percent of our total exports go to China, which accounts for less than one percent of the total economy. Paul Ashworth, an economist with Capital Economics is optimistic and “barring a complete collapse” of the Chinese economy, he believes the American economy will get by relatively unscathed.
There are some good points for the slow down in Chinese economy. The most noticeable is lower gas prices due to decreased demand from the economic giant.
Economists state that the US economy could sustain steady growth in the realm of 2.5 to 3 percent increases in spite of decreases in the Japanese, Chinese and European economies. This is not to say we will never feel an impact from other slowing economies, China included. If it continues to decelerate at its current rate, we will eventually see a major impact to the United States.