China: An ever changing economy

The Asian country’s annual growth has decreased substantially in the past years. Will it affect Latin America? 

China: An ever changing economy

Since the late 1980’s, the Asian nation entered in an accelerated growth cycle where urbanization and industrialization expanded quickly. Their bet on the future was based on taking advantage of their then population of 981.2 million by putting them to work. Workers received a higher comparative salary which boosted population and, therefore, more production was achieved. Now the population is of 1,388.7 million; growth surpassed an average of 10% per year

Latin America played an important role in Chinese development, as the production processes requires two main inputs: labor and raw materials. China established factories and its workers and prime materials were bought outside. This opportunity was taken by the American region and, as a result, 60% of the top Latin American exports are primal matter.

The Asian republic exports their product mainly to United States, Hong Kong, and Japan with a total market size of around 1 trillion dollars. Since the 2008 crisis, the levels of consumption in the nations previously mentioned has decreased and the FED rates increased during the debt crisis; people are expected to take even less credit and consumption.

An inside growth strategy was put into practice given that 20 years of industrialization created a new breed of rich individuals and greater infrastructure was acquired; a booming service market was born. This year, the Chinese government’s growth expectation is of 6.5%; In the closure of the second quarter, the service sector grew 7.7%, while the industrial output was 6.4% and primary sector’s growth was 3.5%. The strategy seems to be working.

The Chinese economy may grow at a slower rate, but it’s growing faster on the inside as more transactions are being held within the economy. This shift is part of the nation’s 2049 strategy when the nation will celebrate their 100th birthday on the promise of being a stable and progressive socialist nation that adopted capitalist means of production.

The big loser is Latin America as less raw materials are needed each day and the crude and oil market suffered a severe oversupply. The region is a primary sector continent and it has made few efforts to gain a value-added industry. This leaves the area open to global market shifts.

 

Latin American Post | Carlos Eduardo Gómez Avella

Copy edited by Susana Cicchetto 

Trade
  • 07/25/2017
  • By Carlos Eduardo Gómez Avella

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