According to surveys, for several months investors around the world were concerned with the Chinese-American trade war the most. There was much talking about the effect it will have globally. Of course, investors were pessimistic because this trade war is not something very natural. Some predicted that this confrontation will damage the US economy because the increased tariffs will hit many Americans including farmers, businessmen, stock market managers, and many others — as a result, it might provoke inflation, and harm the entire country. The US economy has ties with many countries so the chain reaction will lead to the negative consequences in Europe and the other places in the world. At the very same time trade war is not a benediction for the Chinese economy hence it negatively affects the entire region of Asia.

Basically saying, for a long time the investors and economists were considering the US-China trade war as the biggest threat to world stability. But most of the fund managers in the latest survey conducted by Bank of America Merrill Lynch said that the highest risk factor for the world economy today is a slowdown in the economy of China, not the trade war (although the trade war has the second position in the list of the threats to the global economy).

Why the Slowdown of the Chinese Economy Is Important?

The factors behind the economy ongoing decline are mostly associated with domestic economic issues. The volume of investments has dropped to 45% of the gross national product. The national debt has reached 260% of the GNP. The governmental pressure on the small business has increased, it became harder for small businesses to borrow money. Of course, the trade war is another big issue for the Chinese economy and probably the main reason for the gradual decline if we speak of the outside influence.

The slowdown of the Chinese economy coincides with the decline of European manufacturing. It makes the current trend global. Chinese people little by little stop spending much on houses, automobiles, cellphones, and other expensive commodities. This trend is catastrophic for many companies around the globe that viewed China as a huge and stable commodity market. These companies are losing huge amounts of money because of the economic issues of China. Some economists consider that the possible economic crisis in China will be followed by the global recession.

What makes the situation only worse, is that the official data on the Chinese economic growth/decline is not trustworthy. It is believed that the crisis is deeper than the figures show it. Beijing is already presenting the stimulus measures but experts say these moves won’t defeat the negative trend. Most probably it’s too late. The foreign companies hoping to sell most of their products on the Chinese market make these companies unprepared for the problems to come because of the lack of actual knowledge about the economic situation in China. The situation fell beyond control and now the world should think of the ways of salvation. Not the world, but rather each of us.

Final Thoughts

Fiat currencies around the world have terrible relations with a long history of conflicts. 10 years after the invention of Bitcoin and blockchain (as a response to the crisis of 2008) people will suffer again because the new technology is yet to become mass adopted. That’s gross. We should learn from the mistakes of the past, not repeat them!