China and its Financial Crisis
China in Deep Trouble by Labor Strikes
I am an avid economical development watcher having interest not only in Indian but whatever is going on in world’s different countries. You can say I have an enthusiasm for everything related to development and even the failures of policies adopted by different countries of the world.
I have my special interest in Chinese economy because they are our main competitors in Asia. I would not say that their failing economy and increasing labor unrest is a matter of satisfaction for us but the fact they are going through a bad face is a reality.
The Chinese government is trying its level best to keep economical matters under control but there should be no doubt whatsoever that the recession in China has already taken deep grip over the policies and economy and the signs of the economical slowdown will obviously effect other countries.
I was reading report of Indian Moody's investor service which clearly indicated that growth rate of China is going down regularly and global demand of their products is constantly going down, thousands of Chinese factories have either been already closed or on the verge of shut down.
There were rare cases of labor strikes in China but in recent times labor unions are actively showing their dissatisfaction by organizing strikes in the streets. The labor force sitting at home in the process is going through a stressful mental state that could explode soon worsening the situation if the present condition of industry does not improve.
If the recent agitation on such a large scale in Guangdong Province the main industrial state of China is any indication then Chinese policy makers and factory owners must have lots of problems to solve at their hands right now.
Actually, large Chinese factories have no orders in hands but they are neither removing their workers from the pay role nor paying them their salaries but assuring to pay them soon. Same is the case of transport sector laborers working as loaders at ships and trucks.
All these labors have not been paid for months and they have no option but gather at highways and demonstrate for their pending salaries. I believe the Chinese government has a tough task to deal at their hands in such a tough situation. Probably the Chinese policy makers are planning to adjust all these unemployed workers in service sector provide they agree to work as waiters and cleaners.
Chinese Economy At Lowest
China is in trouble, I mean their economy is slowing down very rapidly. If we look back at their growth rate of less than 6% during 2016-17 which is perhaps at the lowest in last 25 years that clearly tells the story and the entire world should be ready for the impact of Chinese economical debacle. That is one side of the story and the other side is that there is no alarming situation in their economy but they are shifting from export oriented country to service provider so it’s normal if China is registering lower economical growth.
However, Chinese government had set a target of 7% growth rate for its economical growth and it’s almost there but the very fact that China had been growing at the rate of 10% or more in last couple of years and reached to the status of second biggest economy in the world will certainly feel it as a setback. The Chinese demand for raw material and their demand for development in infrastructure sector played a major role for keeping the world markets doing comparatively well.
Chinese growth story was major reason that kept world markets full with consumers items made in China. But the story is different now, the international markets are feeling the impact now as the demand is at its lowest especially in countries which were dependent on Chinese economy. If we look at the other reasons the crude price has come down to almost one third during 2015 and reducing demand in China is said to be one of the reasons behind that.
If we believe the experts on Chinese development story they feel the Chinese are in deeper trouble than what it appears on the ground level. They feel the Chinese growth is under 5% at the most at this point of time but being kept behind the iron curtain by the communist party of China. The government of China is still trying to control the economy by using high handed methods instead rather than accepting the market’s truth. There is so much to add in this topic and I am willing to do so in my coming posts.
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