IMF confirms that the economic shock coming from China in 2016

2712 2015
In a report issued by the US Council on Foreign Relations
A report issued by the Council of American Foreign Relations revealed that China suffer a slowdown in growth now, while the International Monetary Fund is expected to grow in 2016 by 6.3%, which means that next year is the Year of China privilege of positively and negatively, which will follow the world how the country in which Global economic growth has led to more than a decade it can be turned into a source of the next global economic shock.

Since a decade, shocks cascading global economy issued by the rich countries: the mortgage crisis in America, and the crisis of the euro in the European Union, and disappointments successive in the Japanese economy, however, the year 2015 was different, despite fears of a Greek exit from the euro zone, where the big shock of the "China" came in last summer, sparking a wave of tension, anxiety and lack of confidence in other emerging economies on the one hand, and the postponement of the US Federal Reserve to raise interest rates in September, on the other hand.

In the report issued by the Council on Foreign Relations, about the global economy in 2016, the signing of each of the "Sebastian Mallaby," "Paul Volcker," December 22, 2015, it: as landing China market triggered the global market concerns in 2015, the uncertainty in the global economy comes from China also in 2016.

If the IMF forecast for global economic growth in 2016 is (3.6%), this slight rise from last year, which in 2015 grew by 3.1%, will not change anything from the expected outcome for dealing with the rich economies.

According to all the centers of economic growth in the world, the US economy, which grew by 2.6% in 2015, it is expected to grow by 2.8% in 2016, a very slight increase in the end is not a big difference from what it was in the past, so that high Inflation rates are still below the required and the target for the Federal Reserve Bank level, which explains why the central bank raised interest rates very carefully so as not to introduce the US economy to the risk of sudden shocks.

Both Europe and Japan and has seen more slowly than the United States growing although they face deep-rooted economic problems, but they do not pose an imminent threat: the euro-growing zone economies achieved 1.5% in 2015, up from slightly more than 1% in 2014, It is expected to provide economies in 2016 with the same percentage last year with the promotion of exports due to lower oil and a lower interest rate and the weakness of the currency rates.

Japan in a similar position in terms of economic weakness, but it is more dangerous than Europe, due to: the burden of government debt is frightening with the increasing population of the elderly, which is a negative impact on growth, where government authorities are seeking to address this urgent problem. The Bank of Japan is making strenuous efforts to provide incentives and try to rely on the Trans-Pacific Partnership as a mechanism and a way out of economic reforms necessary for growth. However, no one expects that Japan achieved miracles in 2016, where growth will be with the best estimates of 1%, well below the growth rates in the United States, and slightly less than the euro zone.

And we come to the growth rates in the "China" and its impact on the global economy, which saw a significant slowdown, and after that grew by almost 10% between 2006-2014, growth in the year amounted to 2015 the proportion of 6.8%, is expected to reach growth of 6.3 percent in 2016 a decrease of 3% from last year. To put these percentages in context has the growth rate dropped to (third) in the two years (2014 - 2016) in a manner similar to what happened to the American economy in the seventies of the twentieth century, which resulted in the case of inflation, recession and lack of confidence in government performance. But the real concern is that a slowdown in China's case can easily give rise to a more "slowdown", and for this reason has become China is the most obvious source (which will not surprise the world) for the expectations (and shocks) the global economy in 2016.

In the last quarter of the last century, China has built its dynamism on non-sustainable or stable factors, and reactive rather than initiative (copied Western technology) where you see that the rise in spending on investment can raise the rate of growth and spur more investment, while the (sustainable investment) It is not available to properly unless there is real consumers and a consumer market able to absorb this production capacities. In the past China has been applied that the surplus production can be exported outside of the theoretical The situation in the future, it is that: Chinese households will become the first consumer productive force in China.

Optimists believe that China will manage this transition smoothly, but unfortunately, this will be difficult, because investment spending more volatile than consumer spending, which is likely to fall faster than consumer spending can not be avoided or prevented.

For example, the investment spending such a large share of the economy, according to the World Bank, it was the share of investment spending is 48% in 2013, compared with 36% for consumption.

The result is that China is experiencing a slowdown in growth now, while the International Monetary Fund, China is expected to grow in the next year in 2016 by 6.3%, there is a possibility much less by some other growth centers, where you expect a reduction of growth in China to 4% or so. This means that 2016 is the year of "China positively and negatively par excellence", where the world will follow closely: how the country that led the world economic growth for more than a decade, could turn into a source of the next global economic shock.

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