Made In China

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Made In China

Economy  |  August 15, 2015  |  
Workhorse Marketing

The rise in developing China has been a major theme for the past decade and their insatiable appetite for resources and expansive government funded stimulus was the source of their biggest world export: global inflation. Double digit GDP growth in China was the expectation for many years and analysts predicted this growth could defy the laws of economics. What has become evident in recent years, as the Chinese economy has reached a level of adolescence, is that China is not immune to the economic cycle. Evidence of a slow down in China is more troubling than the recent events in Greece and Puerto Rico. Many industries have banked on double digit Chinese growth and their economic strength was the basis for worldwide expansion of multi national firms into the emerging markets.

Why is this important today? In a period of slow growth and low interest rates governments around the world are all easing to stimulate growth and inflation. China’s biggest export may now be global deflation. Our financial markets in the U.S. have reached a consensus view that interest rates will be rising soon and we hope that rates can return to normal, as evidence of a sustainable economic recovery. China’s export of deflation in global commodities through, weakening demand driven by a slowing economy, may very well put a near term lid on global GDP growth. Interest rates may stay lower longer.


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