The Fall of the Chinese Economy

China has been making a great effort to get the western part of the world back on its feet. Their exports are key to their economy and if the west stops buying from China, they may come into some issues. As you may have noticed, I don't think that China is still 100% reliant on the west considering recent pacts with Brazil, India, Russia, and South Africa, but I don't think they're quite ready to totally give up a lucrative deal.

However, as China tries to help the West get back on its feet, it's making deals with even more countries in the East. China recently signed a free-trade pact with Singapore who is a one of their largest trading partners. So I think that even if the West falls short, China will do fine. They're even lowering tax rebates on thousands of goods that they export to any country which will probably attract some more buyers from Africa or South America.

A lot of people claim that this is due to the global crisis. Reporter after reporter says "... due to the global crisis," "Because of the global crisis...," "Thanks to the global crisis..." but not one of them says what the global crisis is or why or how it's affecting these nations. I'm going to tell you that I don't think China's outreach for more trading opportunities has anything to do with this "global crisis."

China's cost of labor has been increasing as workers are becoming more and more skilled and educated. Because of this, the cost of exports that are produced has risen and makes it less attractive to prospective buyers. To make up for this, these buyers look to other countries to import from. Bangladesh's garment exports have doubled despite this so called "global crisis" that no one can clearly define. It doubled. People are buying more. Those countries who are now importing from Bangladesh used to be importing from China but have stopped doing so because wages have driven costs up so much. This means that China lost that business which has decreased their income from exports. I'm sure this is a trend that's happening all over the country. A toy company shut down:

A Chinese toy maker that sold to US giants Mattel and Disney has gone bust due to the global economic crisis [...]

Wrong. A Chinese toy maker went out of business because their costs have increased so much that Disney and Mattel probably stopped buying their products and turned to another company in another country. Disney and Mattel wouldn't pay rising costs for Chinese labor, they would probably simply buy somewhere else. I'm sure there was something in their contract that would have addressed the issue of rising costs. This has nothing to do with the credit crisis and lack of investment spending across the world. This is something that was caused by rising wages (which is the opposite of the economic crisis) that have been rising for 5 years.

http://news.bbc.co.uk/2/hi/asia-pacific/7671482.stm
http://www.terradaily.com/reports/China_tries_to_shore_up_exports_by_raising_tax_rebates_999.html
http://www.terradaily.com/reports/China_Singapore_sign_free-trade_pact_state_media_999.html
http://www.terradaily.com/reports/Bangladesh_garment_exports_soar_at_Chinas_expense_trade_body_999.html
http://www.terradaily.com/reports/7000_workers_laid_off_in_China_as_toy_maker_closes_state_media_999.html