Is It Over for China?

The fast-growing economy in China has served the needs of almost everyone in the world. When we go inside stores and look at the products, it will be quite hard not to find a product not made in China, unless the stores are selling the products from particular country. Chinese production has spread around the world because of the cheaper price comparing to the rest of the world. However, according to some analysts, this will not last long. This is proven by the trade deficits of China. In March 2012, Wei Gu wrote in the article that China has earned trade deficits for the new years, which was normally the time when the economy goes up. This might indicate that Chinese economy is slowing down.

http://www.guardian.co.uk

With the improvement of productivity in other countries such as India and Indonesia, China should maintain a lot of things to be competitive, including keeping the currency low. Chinese currency (yuan) is speculated to be appreciated; however, the government keeps it very low to boost the country's export. The outcome is everything inside China becomes very expensive for the locals to afford. Another problem for China is the inflation. With the increasing economy, inflation is undeniable, overheating is happening all around the country. Without depressing the effect the inflation, maintaining the currency in a low level is unlikely to be always possible.

Also, with the one-child policy, it will be very hard for China to support the elderly people. Even though the government will cover the costs, still, 1 child will support 2 parents. It will be very hard for the government to raise the budgets. With this policy also, there is a mentality of the only-child being spoiled. Even though it seems simple, from the psychology point of view, it might not be the best thing to have. The habits of being spoiled can create the mentality of laziness and the feeling that the parents will inherit all the parents' wealth.

However, even though there are a lot of controversies about the future of China, in fact, we now still see a lot of products from China. There are still a lot of international investors that invest their businesses in China. A lot of outsourcing as well are happening in the country. Another proof that China is still doing well is the coals they import from Australia. Australia is now in its mining booms, with China as the main customer (although a lot of people are predicting it to end soon). So, is it over for China? May be. Or probably it will not come in the near future.