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China and the World Economy

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The Chinese economy grew by only 7% in 2015. For other countries, this would bring a great gain. For China, it represents the lowest growth in 25 years.  Industrial production fell in December for the tenth straight month. Fearing that the numbers will continue to decline, investors have taken money from the country. This sank the yuan to its lowest level since 2010, this Thursday, followed devaluing, which brought more concerns to international markets about a possible economic war.

Stock market indices fell about 7%. Will it be China the brake of the world economy, after years it was the engine? Christine Lagarde, Director of the International Monetary Fund, believes that the faltering performance of the Chinese economy is a fundamental cause of that global economic growth is a “disappointing” pace. The World Bank, corrected downwards its forecast of global economic growth by 2016, from 3.3% to 2.9% caused by a weak cyclical economic performance in some of the so-called emerging economies.

For China, the World Bank sees a slowdown in growth, ranging from 6.9% last year to 6.7% for this year. “But there is still the risk that the slowdown in the Chinese economy faster than expected,” said Ayhan Kose, head of the World Bank.

But one of the problems is that, contrary to what happened in other countries, in China many economic indicators have not been corrected. Factors such as the ample capacity of the industrial sector, the high indebtedness and the “inadequate” demographic situation in China make the Chinese economy to show a weakening trend to be followed in the coming years. China investments now focuses on amending the weaknesses and structural adjustment; keep unemployment low is a political priority for the Chinese Government.

China investments now focuses on amending the weaknesses and setting timelines keep unemployment low is a political priority for the Chinese Government. China investments now focuses on amending the weaknesses and structural adjustments, including in Central and West regions, and infrastructure in the sectors of education and health China service sector activity expanded in January at its greatest rate in six months, helping to offset the weakness of the giant manufacturing sector, which has put pressure on the second-largest economy in the world.

Sources: DW and CNN Expansión

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