Media Assignment-Inflation, Current Economic Slowdown (Essay Sample)

Media Assignment-Inflation
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Media Assignment-Inflation
In the article titled “World Economy Feels the Impact when China takes a Knock” Charles Giles focuses on the current economic slowdown and inflation in China and how it has affected the rest of the world. He argues that the fact that China is the largest economy in the world means that any economic knock is likely to have massive spillover effects that are likely to affect the rest of the world, especially South and East Asia. In this article, Giles explores through which China affects the global economy. One of them is trade and exchange rates. Although the volume of Chinese exports is growing, the weakening of the economy and inflation have affected the growth of the countries that are dependent highly on china’s demand for oil, machine tool, and metals in its industrial centre (Giles, 2016). Chinese neighbors that have integrated supply chains such as South Korea and Japan have been hit the hardest. In Europe, Germany has felt the heat because it is the largest producer of capital goods that go to China. Australia has also been affected immensely by the economic slowdown in China. Another way in which the economic slowdown and inflation in China has affected the world is through oil and commodities. One of the reasons for the current drop in oil prices globally is the decreasing strength of the Chinese economy. The reduction of oil and commodity prices sparked by the situation in china has led to deep economic recessions in countries such as Russia and Brazil, Middle East countries have also been hit financially by the reduced demand for oil in China due to the ongoing economic slowdown and inflation (Giles, 2016).
Another channel through which the shocks in the Chinese economy affect the rest of the world is confidence. Gilles argues that all the other factors are predictable but confidence is not. Loss of confidence in a certain market affects the willingness of organizations to invest in the market. One confidence disappears; it can have a massive impact on the global economy, leading to fall of companies and deep recession on others. The economic slowdown in China has led to investor flight which has witnessed outflow of capital from the nation. Gilles argues that capital outflows from China have reduced economic activities in the country, affecting...