China's Economy Hits All New Low: What Does It Mean?

Posted: Jun 18 2015, 7:55am CDT | by , in Latest Business News


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China's Economy Hits All New Low: What Does It Mean?
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As the superpower's economy dips, the ripples will be felt around the globe.

For the last few decades, China has been the model of growth in the current economic market. However, things are changing, and in a big, big way. According to Business Insider, China grew 7.4% last year, missing its own 7.5% target and notching its slowest expansion since 1990. There are some people who say that this might not even be accurate - they think the Chinese government is trying to cover up what could be considered a failure.

The worst part is that there are no signs of any stopping: China will likely see less than half of the economic growth that it has seen throughout the last thirty years. Now it might not seem like it is that big of a problem, but what happens in China is just a glimpse at a worldwide problem that is reaching all corners of the world, including the West.

The problem is that many countries, including the United States, actually owe China money. It isn't that they are going to come around and try to collect their debts - they don't want to burn any bridges. Instead, they may stop with the money loaning altogether. Research from China has shown that as much as $6.9 trillion was invested wastefully from 2009 to 2014. That doesn't look good for lending out money at all.

Another implication is that the Chinese are dealing with the same problem that the United States is face: a problem with the middle class. The problem is that many people are making the jump from "poor" to "middle class" but fewer are making the jump from "middle class" to "rich." This means that there is a lack of spending as people aim for that next circle, slowing down the economic pattern.

Since China exports around the world, there is another problem we could face. The cost of goods manufactured and shipped from China could rise in costs by as much as 25% - a severe jump. It also means that goods produced in other countries won't be as valuable to nearly 1.5 billion people - which could create some pretty lasting ripples.

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The Author

<a href="/latest_stories/all/all/46" rel="author">Noel Diem</a>
Noel passion is to write about geek culture.




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