Once the booming economy and the backbone of worldwide manufacturing is now reeling under tremendous pressure from all corners. China current generation of youngster never understood the meaning of economic downturn and always went from one step of growth to another. Chinese government did fabulous job in opening the their economic in a very controlled environment without losing the control of economy for the last 30 years and now giving direct competition to world power like USA, Russia and Japan.
Chinese
government realized that if they want to get powerful in all front then they
should be good in infrastructure as well as very strong export. For export
Chinese government offered packages to local SME and SMB to start the
manufacturing center and hire low cost of resource to keep the cost of the
product low and then played around with their currency to maintain the trade
surplus with most of the countries they did business.
The overheating
of economy coupled with Global economic slowdown especially in Middle East
impacted china hard. Most of the government funded companies started falling
apart as well as private companies who took loans from banks start facing
servicing their debt.
The stock
market crashed and government were forced to jumped in and also devalued their
currency to keep themselves competitive in the marketplace. It is correct that
China is having sufficient foreign reserve to sustain the downturn but also
having sprawling economy and population to support.
you take any
industry and they are sitting on over capacity and dumping it to other
countries which is creating lots of resentment about Chinese companies trade
practices. The way India impost MIP (Minimum Import Price) to protect its Steel
sector, I am sure other EU countries especially UK will be doing so soon. It
wont be too far when the action by partner countries will impact the job market
which will lead to mass layout in their core sector which will lead to more
financial problem. I strongly believe that China government must be working on
formula to reduce the capacity to ensure that their companies dont get the dent
in any form
