The Influence of the Chinese Economy on the Global Economy (Essay Sample)

Impact of China’s Economic Growth on Global Economy
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Impact of China’s Economic Growth on Global Economy
The rapid growth and development of the Chinese economy within the last five decades have raised the country's stake as a major global economic powerhouse. Currently, it is impossible to analyze the status of the world economy without assessing the condition of the Chinese economy. China's status as a global manufacturing powerhouse and a market for raw materials makes it a vital driver of the global economy (Christiansen & Maher, 2017). The cooling down of the Chinese economic growth and trade imbalance, which started in 2010, raises critical questions on the future growth of the global economy. Though the Chinese economy is not fully coupled to the global economy, the trajectory of its economic growth has a significant impact on the growth of the latter.
China's economic marvel is being energized by the interplay between the strong factor accumulation and productivity gains. The economic model adopted by the country throughout the years has been crucial in guaranteeing high returns from low capital endowments in the manufacturing industry (Christiansen & Maher, 2017). The availability of cheap labor, quality work ethics among the Chinese people, and economic reforms make China a conducive market. The incentives provided by the Chinese market continue to attract multinational organizations which effectively make the country the nerve center of the global value chain.
The continued evolution of the Chinese economy has significant ripple effects on the global economy. Current data indicate the Chinese economy is undergoing a structural slowdown due to the diminishing tailwinds that energized the economy (Zhang & Chen, 2017). Changes in the Chinese labor market, sweeping reforms, and the rise of protectionism around the world have rendered the growth model relied on the country ineffective. Numerous reports show that the country's gross domestic product (GDP) has shrunk to an average of 7% from a previous average of 10%. The inability of the Chinese economy to adapt to the new changes causes strains within the global economy.
The deceleration of the economic growth and the diminishing returns is evident that the Chinese and the global economies are at a critical juncture of recession or depression. The rejuvenation of the Chinese economy requires the country to anchor its growth model on a new platform that guarantees a shift from medium to high returns on investment. However, transitioning China into a high-income status country is a challenging task. The economy is experiencing a saturation of both the credit market and investment opportunities (Zhang, Bradley, Collins & Saunders, 2017). The loss of the synergy provided by the two factors has widened imbalances leading to slow economic growth. The deceleration of the economic activities calls for the global economy to brace for a prolonged stagnation until China figures out optimal ways to unclog it