In the last two weeks , several major investment banks released a report with the theme of economic collapse in China . They were admitted , " We did not predict this would happen . " But what if the Chinese economy really fall ? Is the world economy will come down?
This is always a source of concern comes from the end of easy money policy of the United States ( U.S. ) , which has been supporting the economy of developing countries . End credits flooding the Federal Reserve, the U.S. central bank , raised concerns that developing countries may face a liquidity crisis . Usually prone country has a trade deficit and high fiscal . They also noted that vulnerable excessive credit boom and the risk of currency values . This anxiety led to the widespread belief reduction .
Investors are most concerned with countries hit by political instability , such as Venezuela , Argentina , and Turkey . Countries with structural problems such as India , Brazil , Indonesia , and South Africa also makes radar investor concerns .
However , as is often said to be the leader , China is different . Bamboo Curtain country has large reserves and economic growth is still strong . Gross Domestic Product ( GDP ) of China only slowed slightly to 7.7 % on year in the fourth quarter , from 7.8 % in the third quarter . China's exports recorded a growth of 10.6 % on year in January .
But the data does not eliminate investors' concerns . Asian economic giant it is strongly associated with other developing countries . China is also at risk of a credit crunch and debt , as well as potentially hit by a number of internal crisis .
" Given China is the largest developing country in the world and accounts for more than 25 % of the total global GDP growth since 2010 , China's economic drastic inaction is likely to affect every person and every nation , " UBS said in its report , " How Might a China Hard Landing Affect the World . "
Based on a poll of investors in Asia , Societe Generale concluded several factors that are believed to cause a reduction in investor confidence : freezing of the credit markets , massive withdrawals from the banks , or default . There are three default -prone sectors , namely corporate bonds , " wealth management products " issued to investors , financial institutions or investment in the informal sector of China ( shadow banking ) are not strictly controlled .
Other risks that policy mistakes of the government . Chinese regulatory agency is working to tighten liquidity , addressing the problem of shadow banking , as well as the credit limit and municipal bonds . One step in this matter of policy could trigger a crisis that is actually trying to prevent the government .
At the global level , UBS saw three areas that greatly harmed by the economic collapse of China . The most obvious of course is great and the countries cooperate on trade with China . Large commodity exporters and China's neighbors are the most vulnerable if China's economy falls , especially Mongolia , Taiwan , Australia , South Korea , Japan , and Southeast Asian countries .
Financial cooperation is the next most vulnerable area . UBS believes the losses will not be at risk of trafficking China, because Beijing still tightly controls the flow capita .
Chinese economic fallout also can hurt the world market through the introduction of negative sentiment , when a loss of confidence spread rapidly with unpredictable consequences . 1997 Asian financial crisis triggered by currency devaluation in Thailand and the Philippines . Not unexpectedly , the collapse of the country's second currency effect on other Asian markets are strong economic base , such as Singapore and Hong Kong . | ASWJ
No comments:
Post a Comment