MELTDOWN OF CHINA’S ECONOMY

1.Introduction/background

China's Economy: The Roller Coaster Ride We Didn't Sign Up For." China’s economy, the
world’s second largest, is facing its most serious setback in a generation. During the past
two years, economic growth appears to have been cut nearly in half. After emerging from the
“zero covid” policies that Xi Jinping, China’s leader, ordered early in the pandemic, the
country now faces a real-estate crisis and faltering confidence from both its own citizens and
overseas businesses. Over recent decades, China's economy has undergone a remarkable
shift from a centrally planned system to a leading market-driven force globally. Deng
Xiaoping's economic reforms in the late 1970s marked the beginning of this transformation,
opening China to market forces and global integration. Focused on export-led growth,
extensive infrastructure development, and rapid urbanization, China earned the moniker "the
world's factory.

2. Causes and how they sprung back

According to economists, too, China's current economic condition is largely due to its
dependence on debt-fueled investments and the property market, caring little about boosting
domestic household consumption. To counter the effects of the rapidly deteriorating
economic conditions of late 2008, the Chinese authorities took strong and quick action: a
huge fiscal stimulus package equivalent to 12.5 percent of 2008 gross domestic product
(GDP) and a substantial loosening of monetary policy.

3. Present conditions

China is now an upper-middle-income country. Although China has eradicated extreme

poverty, a significant number of people remain vulnerable, with incomes below a threshold
more typically used to define poverty in upper-middle income countries.Following China’s
swift reopening after the COVID-19 outbreaks in late 2022, GDP growth was expected to
rebound to 5.1 percent in 2023, from 3 percent in 2022. Over the medium term, China’s
economy continues to confront a structural slowdown.

4. Needs
Improving China's economy involves addressing various factors such as innovation,
sustainable development, and financial stability. Encouraging technological advancements,
promoting entrepreneurship, and maintaining a balanced trade policy can contribute to
economic growth. Additionally, focusing on environmental sustainability and social welfare
can create a more resilient and inclusive economy.

5. Reflecting Global Impact

Amidst China's economic turmoil, a global recession threat emerges, fueled by its second-
largest economy status. International trade disruption, impacted commodity prices and
resource-dependent nations. Financial markets brace for heightened volatility, stirring
unease among global investors. The intricate web of global supply chains, intricately tied to
China, confronts potential disruptions, intensifying the economic fallout on a global scale.
Vigilant scrutiny is imperative as nations navigate the intricacies of interconnected markets
in this unfolding scenario.

6. Discourse of it's Impact on India.

China's economic downturn resonates across India, presenting a complex tapestry of

challenges. Currency exchange faces turbulence, impacting trade balances, while
diplomatic relations strain amidst economic uncertainties. The job market feels the
reverberations, with employment opportunities for Indians caught in the flux. In the
automation industry, disruptions in China create a ripple effect, altering the dynamics of
India's sector, adding another layer to the intricate consequences woven by China's
economic downturn.