China’s Economy Leading Towards a Problematic Downfall

Since the Global Financial Crisis, China has continuously been striving towards its continuous growth.  Sustaining China’s economy and creating better numbers for its growth rate is now the main course of the Chinese government.  There is no better way than up for China based on the sheer numbers that they have to deliver to the economy.

Since the beginning of 2008, China was the first economy to try and sustain its growth rate. Critics would say that this is because China has continued using an old and traditional economic model where they based their needs in investment for short run economic sustenance and base their long run goals to the exports of their country.

However, this spiral upward movement of China’s economy reached a problematic stage earlier this June 2012 when its growth rate slows to 7.6% from an 8.1% in the first quarter of 2012.  Critics would say that this can be attributed fully to the expected consumer inflation problem and on an import growth.  If we would analyze these problems, this would mean that the Chinese economy’s old and traditional model of more exports and more investment is starting to have a trickledown effect to its consumers when the exports are lower than the imports.

When it comes to Chinese investments, the economic model on producer price deflation has created a more problematic investor system to China than it could have helped starting in June 2012. 

However, China’s economic leaders are expecting an increase in numbers in the next quarter o 2012.  Of course, the downside risks remain and the old model of short run and long run methods will still apply but the problem is whether or not China can sustain their needs in the medium run where its numbers need to go up and its expected economic downfall would start to rise again.

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China and the Gold Exchange Market

China is an important player in the world market.  However, China is also one of those countries that have been playing a very negative role in the world.  China has been using gold and their gold exchange market in order to fight against the loop hole of United States’ sanctions in Iran and still transact with Iran.

What, then, happened in the Gold Exchange Market? Positively, China’s claim on gold reserves has played a good role in its country.  According to China Daily, a local newspaper, the interplay of gold market exchange has proved to play a good role in China’s economy.

In order to help trading gold in the Chinese market, there are three factors that have to be played properly for the market to exist in relation to the other markets in China and in the international arena.

First is to establish a deferred delivery service that will provide trust in the players and so that the players will know that they do not need to worry about people scamming them in the gold exchange market.

Second, it is also important for the trade exchange to create gold-related investment products.  This would mean that a new industry of gold will open in China and this will provide a greater means to influence the Chinese to invest in some gold which would help China and its economy.

Finally, it is also important to integrate the exchange into the international markets and open up the gold reserves of not only China but also of other countries.  Of course, this would not necessarily mean that China may be doing some friendly acts towards its neighbors, this only means that they will know which country have more gold reserves and which countries have no way of supporting themselves when gold becomes the new currency of the world.

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