Why China s Fall Would Have On The Global Economy

Using the elements of PEST analysis as a framework discuss what impact you consider China’s fall would have on the global economy. The Chinese economy can be viewed as the cornerstone of the global economy. The current global GDP, measured in purchasing power parity of nearly 60%, as well as current international rate of growth at more than 80%, is primarily accounted for by China and other neighbouring middle-income countries, such as India or Vietnam.[1] These numbers are significant in understanding our global economy, which is widely interconnected through alliances of trade, laws and finance, thereby affecting our daily lives politically, economically, socially and technologically.[2] With recent analysis indicating that China’s growth has declined to about 6.8% by the end of 2015[3], how would a crash in China’s economy affect the global market? Following the 2008-2009 global economic crash, emerging markets like China with a rapid growth rate were presumed to safeguard the larger economies of the European Union, Japan and the United States. As China expanded its industrial revolution with an unprecedented annual growth rate and increased international trade, many countries in particular Germany benefited economically. Germany became one of China’s main suppliers for technology that it required in order to produce goods, as well as luxury products such as cars for the new-money generation of entrepreneurs; Chinese buying power currently makes up 6.6% of Germany’sShow MoreRelatedGlobal Trade And Its Effects On The United States1046 Words   |  5 Pages In our quickly expanding global economy, how states execute trade is more important than ever. Global organizations like the International Monetary Fund are established to help the states trade and regulate trade currencies. 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