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Cracks in the Wall Street: Unraveling the Worries Behind China’s Economic Slowdown

Title: Navigating China’s Economic Challenge: A Superpower’s Unforeseen Crisis

Amidst its pursuit of becoming a global superpower, China finds itself grappling with a significant economic crisis. As the world’s second-largest economy faces adversity, its repercussions are bound to resonate worldwide.

Thus, the world must take heed.

China hosts numerous major companies within its borders, operating vast factories that supply goods across the globe. Beyond this, it dominates global manufacturing and serves as a leading exporter of commodities. Moreover, China stands as the world’s largest consumer of various goods, including metals. Its pivotal role in bilateral trade with many nations underscores that if China’s economic stability wavers, the world will undoubtedly feel the tremors.

‘China’s Prosperity Model Faces Unprecedented Strain

A prominent American daily newspaper recently reported that China’s economy is currently entrenched in deep turmoil, casting doubt on its 40-year record of prosperity.

According to the report by the Wall Street Journal, economists now acknowledge that China is entering an era of sluggish growth. Adverse demographic trends, escalating distances between the United States and its allies, and their implications for foreign investment and trade have worsened the situation, putting both at risk.

The Wall Street Journal quoted Professor Adam Toje, an economic crisis expert at Columbia University, as saying, “We are witnessing one of the most dramatic shifts in economic history.”

Statistics from the Bank for International Settlements revealed that by 2022, debts at various levels of China’s government and state-owned companies had escalated to nearly 300% of its gross domestic product (GDP), surpassing the American level. This was a significant increase from less than 200% in 2012.

Conversely, China’s National Bureau of Statistics reported in June that its total GDP had grown by 5.5% annually in the first half of 2023. During this period, China’s GDP stood at 59.3 trillion yuan.

China Has Faced Such Crises Before

It’s worth noting that China has encountered economic crises twice before. In 2008-09, during the global financial crisis, and again in 2015, China weathered similar shocks. On both occasions, China defied skeptics and emerged with a stronger economy, showcasing its resilience and ability to rebound.