“THE UNITED STATES may settle into the malaise it found itself in, through the 1970s, prior to the present influx of globalization. It could survive but not flourish,” said Pong Teng Siew(pic) head of research, Inter-Pacific Securities. THE International Monetary Fund (IMF) may have discovered China as having more to lose in the US-China trade battle, but the real loser is the world which has become financially more influenced by China.
The initial impact sometimes appears in emerging economies, where a fresh slowdown in the global world economy has been focused. Asian economies, in particular, will feel the pressure from slowing Chinese demand for his or her exports. Commodity producing countries will also suffer as prices decline in the wake of sluggish demand from China.
Growth objectives for rising and developing economies is now cut, since April, by 0.3 percentage factors to 4.1% this year. China’s overall economy grew at an annual speed of 6.2% in the next quarter, the weakest in nearly three decades, while exports increased by 0 just.1% in the first half. Through the entire connected supply chains carefully, these fragile exports which registered the largest drop to the US, dampened demand for imports of components found in completed products also. Susceptible to any slowdown in China Increasingly, dubbed the Asian powerhouse, is the Association of Southeast Asian Nations (Asean) economic bloc, that China was the biggest trading partner.
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As there are expectations for Chinese development to slide between 5% to 6%, the rest of Asia that have prioritized trade with China, may need to look for growth somewhere else. 586bil unleashed following the 2008 financial crisis, which had a positive impact over the export-oriented region. “There are, therefore, concerted attempts to solve the US-China trade war,” said Nor Zahidi Alias, associate director of research, Malaysian Rating Corp.
In the short term, China being a sizable trading nation, may have more to reduce but it has already been transitioning away from being dependent on trade. Consumption had contributed to more than 60% growth in China during 11 out of 16 quarters from January 2015 to December 2018, said CNBC, a July report by McKinsey quoting. Indicating its increased self-reliance, China had exported only 9% of its output in 2017, compared with 17% in 2007, the study found. The trade war has complicated China’s efforts to find a balance between sustaining decent growth and tackling problems of high corporate debt and massive shadow banking risks. As a result, these ‘highly dependent’ countries will probably have to suffer more.
In the end, nobody increases the ones that want to ‘hide’ behind tariff walls especially, de-globalise and move from the existing global interdependence and integration. The consequences of de-globalisation can be serious. “THE UNITED STATES may negotiate into the malaise it found itself in, through the 1970s, before the present wave of globalization.
It can survive but not flourish,” said Pong Teng Siew mind of research, Inter-Pacific Securities. The existing wave of globalization is thought to feature modern technology and global democratic processes, with an increase of motion of capital and adoption of free trade. Consumers would be the ultimate loser; they need to face ten years or more of higher prices (on US and retaliatory tariffs) with little or no compensating increases in employment and income.
The huge job cuts happening across the world with talk nearer home of headcount and layoffs freezes in the Singapore semiconductor industry, should give us an indication of some possibly alarming consumer downtrends. By Columnist Yap Leng Kuen, who reckons nobody should be under the illusion that he is the winner. The views indicated here are solely that of the writer.