In an earlier blog post, I discussed how the restructuring of China's economy by its government had the potential to affect other nations and impact the global economy. In this post, I will be discussing the economic and political struggles it is currently facing and how these issues are influencing Western nations. China is currently having trouble with its slowing economy as well as a tough anti-corruption campaign that deals with government figures and local business. Currently, the government is actively seeking solutions to these problems. #
Just a couple of days ago, it was revealed that in the the third quarter, China's already slowing economy is now growing at its slowest rate in several years. The way this impacts business in China is relative to the influence of its most powerful industries, which in China's case are its real estate and manufacturing sectors. Real estate accounts for more of China's economy than any other sector, at 20%. The key factor that affects China as well as many other nations is manufacturing and industrial output. China is the leader in world exports, and an important global contributor of products such as electronics and machinery. As one of the world's largest trading nations, this decrease in overall output will deeply impact the countries it trades most often with, including the United States, Hong Kong, and Japan. This lack of trade is a potential signal of a slowdown in global economic growth, which many worry may especially impact the United States.
Fortunately for both nations, China is already looking ahead at solutions. The country is now aiming to generate high-quality growth, rather than concentrating on meeting growth projections. Many of China's past economic policies encouraged ambitious, faster economic growth, which they are now reforming for the coming years. The nation has decided to cut its growth target for 2015 and focus on gradual economic reforms. With these programs, potential growth in China could be raised by over 3.5% over five years. These reforms, if they work, could work as long-term solutions to China's current economic problems.
However, another large problem plagues China - corruption. The Communist Party is concerned that heavy corruption is preventing government efficiency, and further steps need to be taken to get rid of corrupt government officials. Unfortunately, many of China's local businesses have bases in corrupt practices, especially bribery. As as result, people are concerned that a crackdown on corruption will affect economic policies in China. However, figures from the Party and the central government believe that a determined cleanup will help to improve economic policies in the long term. However, Party officials also claim that if the slowdown should continue as a result of the crackdown, it will be a worthy trade-off for restoring credibility to Chinese government and business practices.
China is currently facing several problems that threaten to affect both its country and the global economy. How do you think China can fix these issues?