"Like a Dropping Ball"

Like a Dropping Ball

Created by: Shannon Campbell

December 17th, 2012

“…Like a dropping ball, we don’t know if it has hit bottom yet. What we do know is that it will have widespread effects.”

 Jason Miks, the lead writer for CNN Global Public Square, reported yesterday on “What China’s slowdown means” through CNN.com. Apparently within the past few weeks, it has been noted about China’s GDP growth dropping from 10%  last year, to 7.6% within the past quarter. Although the percentage drop may seem small, if continued, it will have a continuing and dramatic impact on the rest of the world.

Miks gives an example from Brazil during their fluctuated GDP of 2.5% in the 1990’s. The biggest problem here, is the direct correlation between GDP and commodity prices, and whether they fall or rise. This past week, Australia has recorded its biggest trade deficit within the past few years. Miks goes on to state the reasoning in that iron ore and coal are slowing down because of Chinese demand. This also spirals into other continents, from South America to Africa, and even to the United States.

If China and their steel industry continue to face a loss, the United States and their demand will continue to slow. This has already affected layoffs for coalminers in West Virginia, as well as their savings through pensions and health benefits.

The World Bank and Miks state that,

“China’s consumption of refined metals has jumped 17 times since 1990. Its share of global consumption of these metals has jumped from 5% to 41%. Over the last decade, while China’s demand has been growing by 15% a year, the rest of the world’s has remained constant. China has essentially fuelled global growth in these markets. But now that China’s appetite is waning, commodity prices will fall – indeed are falling.”

China, once again, also affects the oil industry, not just the metal(s) industry. Consumption has been increasing 8% a year within in the past few tears, and this year, it has reached only 2.5%. If it continues, it will have incredibly intense affects, not only for China.

Miks finishes off his article in that he doesn’t mean to predict the end of the world, but to get used to the normal, especially for developed countries and large companies throughout the world. What are your thoughts on Miks’ insight? Do you think more attention will be brought to the table once there is a “big boom” or when it dramatically affects the U.S.? Has anyone seen or read any more information on this slowdown?