You know that feeling when you’re going too fast and you realize you need to slow down before you crash and burn? That’s how China’s economy felt a few years ago, and they’ve since tried to change their ways within the last few years.
For the past decade, China has spent a sizeable amount of money investing in new factories, roads, and apartment complexes. In doing so, China propelled into an explosive growth, and money flooded in from exporters of iron ore and other commodities from places like Australia.
Now, the capital of the People’s Republic of China–Beijing–has come to a dramatic slowdown. The government says the reason for the halt is that they’re trying to steer the economy away from relying too much on foreign investment.
Analysts believed that the spending boom would push China’s debt to astronomical numbers. Of course, this started to mean less demand for imported goods like copper and factory machinery.
Despite how good this transition will likely be for the future, there will be some problems along the way. If Beijing fails to manage this transition well enough, they could find themselves faced with dramatic wage cuts and job loss. Paired with the steady decrease in demand abroad, China’s slowdown has affected (and will continue to affect) jobs in many more places, from Latin America to Australia.
Although this Chinese slowdown may not have a huge impact on manufacturing and America’s economy, experts like those in the U.S. News and World Report article linked above note that we should still be cautious as the effects of the slowdown become more clear. Given that China is the second largest economy in the world, there’s bound to be a slowdown in global growth.
For now, all we can do is keep a watchful eye on China’s manufacturing sector and economy as we all try to figure out the global effects of their slowdown. American manufacturing is continuing to move in a positive direction—so it’s up to us to make sure that we don’t let our own economy go the way of China.