China reports that its economy for 2018 grew at its slowest pace since 1990. The slowdown has economists worried about the impact on the global economy.
DAVID GREENE, HOST:
This week, China announced that its economy grew at its slowest pace in decades last year. And as NPR’s Rob Schmitz reports, the downturn has economists worried about the impacts on the global economy.
ROB SCHMITZ, BYLINE: After decades of near double-digit economic growth, China is finally starting to slow down. What does this mean for the US economy?
ARTHUR KROEBER: The direct impact of the Chinese slowdown on the US economy is modest.
SCHMITZ: Modest – that’s Arthur Kroeber’s point of view. He is the author of “The Chinese Economy: What Everyone Should Know”. And most economists agree with this assessment. The proportion of the US economy that depends on China is tiny if you consider the global economy. Kroeber says a bigger impact on the U.S. economy is the government shutdown, which economists estimate is dragging the U.S. economy down a tenth of a percentage point each week.
KROEBER: The Chinese slowdown is more likely to show up in specific sectors or companies that have, you know, high exposure.
SCHMITZ: Like Apple – CEO Tim Cook blamed slow growth in China for lower-than-expected earnings forecasts. And construction equipment companies, like Caterpillar, will likely be hurt by the continued slowdown in China. Chinese economists have been warning for months of a rocky start to 2019, according to economist Christopher Balding.
CHRISTOPHER BALDING: Even in November, they were talking about the cold winter coming. They weren’t talking about the weather.
SCHMITZ: They were talking about consumers slowing down their spending and local governments mired in debt. Balding says he’s surprised Beijing hasn’t come up with a stimulus package to counter the slowdown, which has been a key government remedy in the past. Instead of impacting the United States, he says China’s slow growth will instead impact the economies of Australia and parts of Africa that China relied on for its commodities. .
Rob Schmitz, NPR News, Shanghai.
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