Is Chinese Spending the Key to Global Economic Rebound?

The recent economic slowdown in China has raised questions about the possibility of the world economy having a rebound any time soon.

Despite its more than 12 trillion US dollars in gross domestic product, contraction in consumer spending and retail credit default has slowed down the global economic powerhouse.

When we dive into the Chinese economy, the government and its people have optimized how they spend, not only has this improved its economy, but also the global economy at large.

In recent months, all eyes have been on China as a possible trigger to awaken a global economic rebound. However, so far, no luck yet.

A Definite Trend

The Chinese government has been able to ensure that at least its people have a working economy. China’s main aim is service to its citizens and next to the world.

As a fundamental economic policy, the Chinese government is in control of about three of the primary energy company: CNOOC, PetroChina and Sinopec. However, they are not so profitable, at least not as they would have been if they are private. So, what do we say in essence, is China of no impact on the global market?

Chinese spending has a ride-on effect on global economic fortunes as higher productivity leads to a boost in the import of fossil fuels from the global energy market.

In terms of the consumption expenditure per capital index in China of the goods and services; there has been an increase in this index to about 6.2% from the previous year of 5.4%. However, this has not come through to significantly raise the global economic pulse.

The New Deal

China accounts for more than I million millionaires and this points to growing spending power that is by all means notable. As the economy has expanded and grew, a lot of investments have sprung up around the country.

Real estate, construction, and manufacturing have witnessed a rapid surge. The number of Chinese moving to the west has also increased in recent years, as the new oligarchs expose their wards to western education.

In terms of hi-tech exports, China recorded more than USD 200 billion in revenues in the year 2018 with its lower-priced products displacing European and American competitors around the globe.

This partly led to the tit-for-tat tariffs heightened by President Trump towards the end of 2018. The back- and -forth retaliation between America and China, also contributed to the slowing down of the global economy.

A Rising Influence

Western nations have stridently raised their voices in recent years as Chinese influence grew around the world. From providing the low-interest rate to African nations and pursuing a policy of finance-and-build on a global scale, productivity has certainly climbed to an all-time high in China.

With more cash to splurge from its foreign reserves of more than USD 3 trillion than any other country, China is rather steady to steer the global economy to a rebound. And this is not a point in dispute. With higher global productivity, US oil producers will pump out more shale oil and the OPEC countries will be assured of steady growth in global demand.

As long as the global energy market is booming, more countries will have more inflows and more purchasing power. Construction activities will witness steady growth and more outlay will be recorded for infrastructure development.

With the wealth going around, the bourgeoisie has more to splurge in global travels and the under-40 around the world will keep the hotel and tourism sector aglow.

China no doubt has the capacity to give rise to a global economic rebound. As the tempers over trade wars get doused, a free flow of goods and services will lead to a boost in global markets and we all can be better for it.

Leave a Reply

Your email address will not be published. Required fields are marked *