Summary of China’s Footprints on the Global Economy

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When the Chinese economy sneezed in 2015, the rest of the world risked catching a cold, with an ensuing fall-off in global commodity prices and talk of recession. While the global economy has since moved on, the threat of a potential China-led worldwide recession is not yet fully in the past. The Federal Reserve’s Shaghil Ahmed spells out, in a succinct and balanced manner, the effects a severe slowdown in Chinese growth could have on the United States and other nations. getAbstract recommends this finely crafted take on Chinese risk to investors and executives. 

In this summary, you will learn

  • What threats plague the Chinese economy,
  • How a severe slowdown in China could affect the global economy and 
  • What Chinese authorities can do to mitigate the risks.
 

About the Author

Shaghil Ahmed is an associate director in international finance at the Federal Reserve.

 

Summary

The Chinese economy is confronting some risks that have the potential to spill over to the rest of the world. An “exogenous 3% shock to Chinese real GDP” would have had little impact on other emerging markets during the 1981–2005 period. However, since 2006, when China became a critical point in the Asian value chain, any Chinese financial distress would have almost an equivalent economic effect on developing countries. China also exerts a much larger influence on global financial markets today.

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