Will Chinese economy collapse?

By Mei Xinyu
0 Comment(s)Print E-mail China.org.cn, September 6, 2015
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In the first two quarters, the growth rate of Chinese economy plunged to its lowest level since 1990.



Is the "Chinese economic miracle" over? Recently, large-scale economic fluctuations have hit almost all emerging market economies. In the first two quarters, the growth rate of Chinese economy plunged to its lowest level since 1990.

READ: China has a larger space to maintain growth

The roller coaster ride witnessed in the stock market, as well as Yuan's depreciation against the dollar created upheaval in global markets of foreign currency, stock and primary commodity markets from late August.

Large advisory bodies in Western countries claimed that the investment environment in Russia seems better than China. The Boston Consulting Group (BCG), for example, reported manufacturing costs in China are almost as high as those in America. The New York Times wrote articles about Chinese cotton spinning companies moving to the U.S. market, while the Indian government vows to surpass China with its advantage of cheap labor force.

However, China's economic fundamentals are still stronger than other large economies and emerging markets. The difficulties China faces currently have been exaggerated. China has much larger space to maintain its economic growth than either the major economies or the other emerging markets. In order to maintain market share, China won't trigger a "currency war;" instead, it has the capability to keep its currency stable.

It's the reality that China will face economic deceleration now and in the near future, which is the result of past economic and social development, as well as world economy being stuck in low growth. The present size of Chinese economy can't compare with the past.

The International Monetary Fund (IMF) reported that China's GDP in 2014 rose first place in the world, accounting for 16.3 percent in total. The U.S. had a 16.1 percent share, the Eurozone 12.1 percent, while the U.K. contributed only 2.4 percent, Japan 4.4 percent, the Commonwealth of Independent States 4.7 percent, Latin America and Caribbean countries 8.7 percent, Middle East, North Africa, South Asia 7.6 percent, and Sub-Saharan Africa 3.1 percent. When the world economy sinks into to low growth, it's hard for China itself to maintain high speed.

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