Eurozone Debt Crisis Reveals China's Economic Weakness

Vice President of Strategic Analysis Rodger Baker explains how Europe's debt crisis exposed the vulnerabilities inherent in the Chinese economic model.

The Chinese continue to watch the way in which the Europeans are trying to deal with their financial and political crisis right now. For China this is particularly important. Number one, Europe has become China's largest export market and that has a major impact, of course, on the way in which the Chinese operate their economy. Number two is that a continued or an even deeper crisis in Europe could pull the entire global economy into recession.
Chinese exports to Europe and to much of the rest of the world saw a particularly sharp drop in 2009. This was something that the Chinese government had to rush to stabilize — they counteracted that dip in exports with a huge increase in domestic investment. The Chinese had hoped, during that time, that the Europeans would simply build themselves back up, pull themselves out of this particular crisis and that China would be able to continue with its fairly rapid expansion of exports to Europe to keep its economy chugging along as China headed towards its 2012 leadership transition.
Although Chinese exports to Europe picked up a little bit in 2010, the rate of growth that the Chinese had been seeing in the previous four or five years slowed down quite a bit. The problem for China is that as the pace of export growth slows, the pace of import growth doesn't. The Chinese still need a very large amount of commodities. They're importing these commodities, not only to feed their export market, but to feed all of this new domestic investment. And that means that while the Chinese may not be making as much selling, they are having to buy still a very high market prices to be able to develop internally.
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• União europeia
• China

[davyoa]

@redwhitedude have you been to china recently? u should my friend.. you might actually learn something. there is a old chinese saying "风水轮流转" its just the way it is... who knows maybe another 100 years later, we might be colonised by the eskimos. in the mean time, it'll be a good idea to pick up Chinese.

[redwhitedude]

@Kaskeyable It's Samsung. All this investing gives chinese opportunity to absorb the knowhow from foreign companies. Chinese companies in these fields have a long way to go.

[redwhitedude]

@Kaskeyable As more people get better pay the market will increase. A lot of the miserable wages being paid to chinese workers, that used to be the case with Korea in the 70s and Japan in the 50s.

[Kaskeyable]

@redwhitedude you know yesterday alone south korea firm sumsang spending and investing china 6 bilion us dolar their smart phone tablet factory base 3 different cities.

[Kaskeyable]

@redwhitedude i agree fully that is going some time te become developed country but now we are talking market size china is the largest market in the world every commodity all world growth heading china thats what we seen.

[Kaskeyable]

@redwhitedude thanks 4 our discussion I appreciate your time!

[redwhitedude]

I will.

[Kaskeyable]

@redwhitedude if you interested this country's economic expenssion spend some of your time there than you understand what is going on, last three years china car market sold 47 milion car One third of world car market,, half of them is luxury car.

[redwhitedude]

@Kaskeyable Ah yes the fortune 500. Unfortunately it seems that the size of the country tends to play a bit part of the number of companies a country has listed in there. So according to size China should be burying the other two countries but seeing that at this moment it is approaching that number I'd say they have some ways to go.

[Kaskeyable]

@redwhitedude every item you use is made in china wether cloths you wear, tv,pc phone tablet or modem devise, you can complain if you get poor goods from china to the walmart simple.