Wednesday, October 21, 2015

China and the world economy

These days there are a lot of atention on the chinese economy and its new slower rate of growth path.Most of the market concern deals with the uncertainty about the outcome of the economic transformation from export to consumpion, which is taking place. Some issues related to this change are: a.-It is not an easy process, specially for those countries which depend of exporting commodities to China whose prices have decreased in the last year and the trend seems to stay at the new level for a while. b.-Besides, the issue of the quality of the data, about how the chinese economy is performing affect preciseness of the conclusions.- c.-How does the adjustment path may become?, either hard, bumpy or soft landing so to speak?.The consensus seem to settle down in between the extremes options. d.-The Chinese authorities seem to have a better control than previously thought, about the adjustment path.- In the mean time , the world economy watch the new chinese economy profile to take full shape, and work some policy options out, to deal with its consequences. How long is it going to take?. Current most developed economies, needed decades to close the transition from production to consumption. But the Chinese economy depend on its own, because of its huge internal market.This means that while it carry out its transformation, the expected outcome of a slower rate of growth (6%-6,5% range) , is not necessarily fully negative for the world economy.There are few economies,actually if any , with such a rate of economic growth.So, the Chinese economy may be able to keep its role to make the world economy recovery sustainable, although at a lower rate.-