Slowdown In China

Next, as mentioned earlier the implications of China’s slowdown will not just affected the Chinese economy and the U.S. but also it impacts for the rest of the world economy. China is one of the major commodity consuming countries. There are lots of industrialisation and urbanization took place in China. However, after many years of investments the project unable to deliver the expected return for investors. Thus, a raises of questions about additional investment plans. This as a consequences lead to a fall in the demand for commodities in domestic consumption and also drive prices down. For examples, Michaels (2015) states that in agricultural sector ‘the global benchmark cotton future prices was below 60 cents per pound, the lowest since 2009’. Then, due to a global market surplus of iron ore that asssociates with China’s slowdown and the subsequent implementation of import barriers, the price of iron ore fell by 47 percent in 2014 …show more content…
Also, the effect of global financial crisis in some of the China’s trading partners such as EU, South Korea and Japan which caused the demand for China’s export decreased. Also, problem of the housing bubble in China. The implications of the slowdown in China’s economic growth has spread over the world economy. It effects on the U.S. economy. This is because of China is U.S. second largest trading partner also the largest holder of U.S. debt. Besides, as demand from China decreased it caused the commodities prices to fall. Then, the effect of the devalued of yuan caused the imported commodities to fall further falls in demand. Finally, China as a leading buyer for commodities such as oil, copper and iron ore, as well as the food commodities in emerging and developing economies has caused the demand for this commodities to fall due to their economic growth