The US recently imposed tariffs on US$34 billion of Chinese imports. Now the US is looking at imposing another US$16 billion in tariffs. They’ve also released a list of US$200 billion worth of Chinese products…
China has been the fastest growing economy across the globe for the last two decades. One glance at the fine-print on a plastic toy or clothes tag will show you just how many things are ‘made’ there.
And if that isn’t enough proof, perhaps the multi-billion-dollar 2008 Olympic Games hosted in Beijing will make it clear that China has been generating a lot of disposable income.
If you’re after figures, how does a 5%-plus annual growth rate sound? Great? Huge? Colossal?
Well it’s certainly impressive, to say the least.
In fact, it is estimated China will overtake the United States as the world’s largest economy by 2030.
China’s rocky foundation
However, there are signs that growth is slowing…you just need to look past all the billions…or perhaps you need to look more closely at them.
Take China’s wild housing market, for instance.
In the absence of property tax, housing prices have been as stable as a ship in a storm. In the calm, investors snap up property, and hope for the price tide to rise again.
But this can mean extreme disruption to an integral part of the Chinese economy.
This housing wave is likely producing a speculative bubble, and companies are growing massively indebted as they’re thrown overboard.
There’s doubt over how long the Chinese economic ship can continue to sail in the right direction.
China’s unclear future
Of course, the positives cannot be ignored.
During its rise, China has brought 500 million people out of poverty, forming a hardworking middle-class keen to utilise their new-found purchasing power.
As a result, this large economy is shifting from a broad manufacturing base toward a more service-orientated economy.
And, with a large population and an exploding middle class hungry for these new services, there are still plenty of opportunities to be had in China.
However, the neglect of the working class in all this — a class with a generation of infuriated young adults on the rise — could also spark a revolt in the next few years…
The Chinese impact in Australia
China is the big powerhouse fuelling the Australian economy.
But will it keep booming? Or will it collapse?
What are the best investment opportunities from China?
And how will they affect Australia and your wealth?
To find out more, scroll down for every article from us on the China story. With new articles daily, we’ll keep you updated on how this plays out.
China has promised to retaliate by matching tariff for tariff. So far tariffs have not yet affected consumers. A bigger risk to us from this trade war is that it could spark inflation.
American’s are waking up to a new and sobering reality. A trade war with China. Some suggest we need not fear a trade war, while other suggest this will bring on the next recession.
I believe the free market will decide where the yuan will go in the future ― not the PBOC. If there’s enough pressure and the trade war gets worse, the yuan peg could break.
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