Fall in shares could affect economy
It used to be said that when America sneezes the rest of the world catches pneumonia. Well, the same can be said for China.
With shares in China in free fall the world should worry. The US and China together generate as much output as the rest of the world put together.
If the market fall signposts, as it does, a slowdown in the Chinese economy it will affect the Wales as it will the rest of the worl
Wales has seen on average two trade missions to China an year – sometimes lead by Ministers. A measure of how important China is to Wales.
Another economic downturn?
Just as when the whole world had bought into the US sub-prime boom when the bubble bust it eventually contributed to the 2008 global financial crisis, the current turbulence in China could have an equally devastating effect on all our lives.
Indeed after the 2008 crisis China notably emerged as one of the twin engines of world growth. Despite the US being the world’s biggest economy China has contributed as much to world GDP growth as the US in the past 15 years and even more than the US since the 2008 financial crisis.
China accounted for a mere 2% of world GDP in 1995 to around 15% now. So if China slows down the world economy will slow with it.
Indeed, the European Union is China’s largest trading partner, and China is the second-largest trading partner of the EU. So, a slowdown in China will certainly affect Europe.
Although Chancellor George Osborne believes China’s stock market woes will not have much impact on European economies.
It is difficult to understand how he can be so sanguine when you couple the slowdown there with the continuous problems
In the euro zone, signs of weaker global growth and vast sums flowing out of fragile emerging markets such as Brazil.
The signs are not good. Indeed it would be a foolhardy person that would bet that the Chancellor’s budget predictions would now be met.
To paraphrase the song, time is undoubtedly going to get harder.