China: B.R.I.C. or Brick? The Nation’s Impact on Developed and Frontier Market Economies
Read Full Article and Analysis Here!
Author: Greg Voegtle
Originally Published on October 11, 2015
-Here I will cover the overview and a few glimpses of what the article contains
It has been over a month since the tumultuous drop of the Chinese stock market and the correction which scared some American investors into U.S. Treasury Bonds in August. In this post, I comb over and analyze the potential global financial impacts the Chinese economy has on diverse regions of the world and global trade.
Is China changing from a B.R.I.C. to a global Brick?
Event: “Black Friday”/”Black Monday”
The stock market losses occurred on what is infamously dubbed as “Black Monday” in China. Matt Egan of CNN Money, described it as equivalent to
“erasing almost the entire value of the British version of the S&P 500.”
The “S&P BMI U.K. Index” is “worth just $2.8 trillion.” For the U.S. stock market, this was the largest drop since 2011, resulting in an official “correction”*
- *(When stock, bond, commodity or market index declines by at least 10% according to investopedia).
U.S. and Global Fears: Another Domestic or Global Recession
According to Richard Quest (in the corresponding video to the above CNN article), anchor of CNN’s “Quest Means Business,”
Black Monday signified a “serious bought of indigestion”
Questions about Individual and Global Impacts
Even if you had a well diversified portfolio, you likely saw yours drop.
- How will the Chinese economy impact the U.S. economic health now and in the future?
- Click here, to see the second Question!
But the most important and underlying question here is:
3) How dependent is global growth on China’s GDP and the nation’s commodity demands?
Today, we will further look at: some of the nations which are reliant on China’s imports, macro-economic investment trends which may impact the United States and global financial markets, as well as…
Fear and doubt in their economic growth was spurred when the yuan (its currency) was devalued on August 14th…
…Despite the devalued yuan, Matt Egan pointed out that a gauge, which measured China’s manufacturing exports, showed their exports had dropped to their “lowest level since the global financial crisis.”
What’s the Significance?!
- With their currency weakened (decreasing the cost of their products), investors did not expect a decline in exports and became worried when such occurred.
✹Short Term Impact: Definately Significant
According to Charles Rile’s article on CNN Money, China’s 3.25 trillion dollar loss…in one month was greater than:
the size of France’s ENTIRE stock market…
✹Long Term Growth: Uncertain
In 2008, I was assigned to give a competitive speech (for my college’s forensic team)on the topic of the double digit G.D.P. (Gross Domestic Product) growth rates seen with China’s economy…
- But that was a Long time ago!
The World Bank’s numbers:
- It appears the end was in 2010, when their GDP was at 10.6%.
- In 2014, it was still at 7.4%.
For comparison, their 7.4% annual rate is greater than any of the developed countries across the globe….
China GDP vs Global Comparison
The World Bank shows that in 2014:
- Germany’s GDP was 1.6%
- The United States’s was 2.4%
- Brazil’s .1%*
*(another suffering B.R.I.C. or Brick..member)
Click Here, for the full article, for more details..
A. Measures Intended to Reduce Volatility
B.China’s Impact on the U.S. Stock Market vs Economy
C.The Effect on U.S. Debt and Treasury Sales
China’s GDP VS India’s…
- China’s GDP over the last 4 years has gradually been decreasing
- India’s decline stopped in 2012
-India’s GDP has been gradually increasing
Click Here, for the full article, for more details on:
E. Why Some B.R.I.C.’s and Emerging Markets Falling
F. African Nations
Tell me your thoughts on emerging and frontier markets in the comments below.
~Author’s Social Media~
Bio: Greg is a U.S. Political Consultant (for the 2014 U.S. Elections) and Geopolitical Consultant with experience working for NATO Military Bases in Europe and NATO PfP Military Bases in The Republic of Georgia. He specializes in strategic communications and analysis, and has also worked on humanitarian issues and lead Scenario Teams (for NATO).
[Strategic and Tactical Level Experience]
-Contact Him here or here: GregInternational14@yahoo.com