How bad is China’s economy? If only we knew.
The closed and secretive nature of the Chinese government, and its tight control over markets, makes diagnosing the Chinese economy a lot like diagnosing a friend’s medical condition using Wikipedia. Bloomberg News recently threw up its hands and declared that, in the absence of clear and dependable measures, there are six different ways you can look at China’s economy, so take your pick.
But while exact details may be fuzzy, the big picture is clear: in each of those six approaches, China is underperforming even recently downgraded economic forecasts, but the news may not be all that bad for the U.S.
A Ripple Effect
China is bleeding money. More than $500 billion vanished from its economy in the first two quarters of 2015 – the equivalent of the economies of entire small nations just disappearing off the world’s stage.
China’s economy is stumbling – sometimes perilously so – and for all that the Chinese government insists to the contrary, global markets are feeling the pressure as the depths of China’s problems become apparent.
When one of the world’s two largest economies stumbles, what happens to the other? As China falters, markets look to the U.S. to see whether we prosper, or if China will pull us down, too.
Flight to Safety
China’s economic slowdown will most impact those nations where it has heavily invested – and that means much of the developed world. China has substantial investments in Africa, the Pacific Rim and South America, and those have already taken a hit. In the first half of the year, Chinese investment in Africa plunged an astonishing 84%. Skittish markets in the
To read more, continue to next page.