Will 2016 witness the economic collapse of China?

 
Today is Monday 18th January 2016 and we are looking at the Question will the Chinese economy collapse in 2016?

We are all very much aware of the impact China has on the world economy. We have already seen commodities and stock markets plummet as a result of its economic slowdown, and this causes one to question whether its economy can survive and prosper or if total economic collapse is possible.

One of our economic colleagues sent us this brief report which we shall read verbatim.

‘An economic collapse may occur due to the government’s inability to support state-subsidized industries as well as capital flight prompting a devaluation of the country’s currency.

Seasoned financial analysts state that conditions in China look as bad as those in America just before the 2008 crisis or Korea during the 1997 Asian crisis.

While some analysts and investors disagree with this outlook, they are quick to accept that China’s economy is headed for at least a gentle slowdown. In a recent report, the Bank of America (BofA) claimed that the country will experience currency devaluation as it changes to a services-based economy. Market forces will thwart the Chinese authorities’ efforts to control the economy and capital flows through official dictats. In addition, major companies in key industries seem to be on the brink of a liquidity crisis while the ability of repeated fiscal and monetary stimulus packages appears to be diminishing.

So what do you think? Do you agree or disagree? Our broad consensus is that there will be a serious decline in economic growth in 2016 for China but we are not quite persuaded yet, of an all-out collapse occurring.







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