What could be socio-political effect on China with a slowdown in their economic growth?
Hi Saurabh, This is THE question that must be lingering on the minds of world’s political leadership. First up, let me quote some facts: – About 20 million of the estimated 130 million migrant workers are reportedly laid-off (mostly due to lack of work). – Trade numbers (Nov, 2008) show that exports have dropped by some 2.2 % and imports, by some whopping 18%. – It has $200bn sovereign wealth fund and is sitting on a whopping $1,7 trillion in foreign reserves. Now, social effects could be disturbing at best and catastrophic at worst. The problem is China is not living in an island. They are interlinked to the world economy as much as, say, Japan is. So once resources run out, there will be social unrest for sure. How much of an impact it has in a macro sense, depends entirely on the scale of global slowdown and on domestic consumption plus the fact that protectionist barriers being erected, gives little comfort. Social unrest can potentially derail the entire process throwing the whole
