China has played the role of a global engine for years as it has successfully pulled a major portion of the world’s economy with its high demand for oil, iron ore and other crucial commodities from developing nations and autos and luxury items from Europe.
But the roar Asia’s largest economy seems to be fading in the recent times amid sluggish economic growth. And the economists say the deteriorating condition on China’s economy will have the adverse impression on other parts of the world too.
News agency Associated Press conducted a survey of 30 economists to understand the effect of the decelerating economy of China on rest of the world.
The survey showed that 57 percent of the economists expect China’s slowing economy to pin down growth in nations ranging from Chile and Brazil to South Korea and Australia.
The only exception emerged in the survey of 30 economists was the United States, which is on the path of recovery from the 2007-2008 financial turmoil.
According to the economists, the US will largely remain insulated from the economic troubles in the Asian country.
Paul Ashworth, an economist at Capital Economics, said, “It’s hard to see a slowdown in China having a really significant impact on the American economy, barring a complete collapse.”
Most of the economists surveyed by the news agency are of the opinion that the American economy can continue expanding at a respectable annual rate of 2.5 percent to 3 percent through 2015 even if the economies of China, Japan or even Europe stumbles.
According to Morningstar economist Robert Johnson, the US is steadily moving on the road to recovery from the 2008 Great Recession without getting deterred by the weakening economy in China.
Johnson noted that at a time when the United States was struggling to escape the great recession, the Asian country was growing at a double-digit pace in the year 2010. And now, he adds, the US economy has expanded at an annual pace of four percent over the past six months, signaling a good sign ahead.
Talking about the US automobile sector, economist Sung Won Sohn, from California State University’s Smith School of Business, said that even if the American automakers, especially General Motors (GM), sell lots of vehicles in the Chinese markets but they are not going to affect the US economy. This is for the simple reason that nearly all are built in China and fails to contribute any larger share to the US economy. Similarly, the US goods including the electronics that are sold in China are also built in the Asian country and hence hardly have any major impact on the United States.
On the oil front, its prices have declined more than 25 percent since summer and this is partly due to China which is using less of it and adversely influencing the global demand for oil.
Amid the slowing demand for oil, the national average gasoline price in the US also dropped 33 cents in October to USD 3.00 even (as cited by the AAA report). The average dropped below USD 3 this weekend for the first time in four years.