A Handy Guide to China’s Economic Slowdown

China’s high economic growth rates over the past few years are due in part to China’s aggressive policies on internal consumption and production. Raw materials produced in China, such as ores and agricultural products, have not been allocated to China’s general population, instead being delivered straight to Chinese factories for production and export. This will likely shift in the near future, the country works toward increasing local consumption. In fact, we may be witnessing the beginnings of the new Chinese economy - one focused on development and quality of life rather than pure mercantilism.

Nevertheless, growth in China is slowing, and if the once-per-decade election process ousts current leader Hu Jintao, there will be ripple effects in the global markets. Investors should be aware of how reduced demand for commodities could affect their holdings, especially in natural resources stocks and funds. China’s top imports include mineral fuel and oil, copper, ores and slag, optics, medical equipment, plastics, chemicals, vehicles, and iron and steel.

 

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