The reality is that one of the world largest economy China is now at risk of plunging into an economic collapse. Experts predict that Chinese GDP may actually drop for the first time in many years. If the current trend continues in China, the situation will go from bad to worse. Experts are predicting that the PMI, or Purchasing Managers Index, of China’s Emerging Industries, will drop. This is the data that’s used to gauge the momentum of various technology industries in China, and is also closely correlated to the country’s PMI. For the first time in history, this data has shown a downward trend this year. In February, the number reached a historic low of 29.9 - a massive drop, considering that it was 50.1 in January. But it’s an accurate reflection of the turmoil that’s occurring within the whole Chinese economy. Experts estimate that the actual PMI will drop further compared to what happened in February when the PMI was at 35.7, which was already far lower than the 45.0 that was predicted for that month. The non-manufacturing PMI also hit a record low, plummeting to 28.9 – nearly 50% less than the 50.5 that economists had predicted. When all these numbers are put into context, they are even worse than what was reported during the economic collapse of 2008, when the manufacturing PMI dropped to only 38.8. The non-manufacturing PMI never dropped during the past crisis. Even more alarming is the fact that the non-manufacturing PMI has always been strong, but in February, it contracted in a major way. It plunged to about 5 points lower than where the manufacturing sector is now. This could indicate a devastating outlook for China’s service industry, which for a long time, has been China’s best hope for transitioning from a manufacturing driven economy. The PMI, is pointing to a brutal drop that shows a big contraction on the economy”. This is a strong indication that China’s economy is slowly sinking, and it could be a matter of time before they suffer a full-blown economic collapse.
Some are expecting the Chinese government to unleash another massive economic stimulus to boost their slowing economy. However, this tactic might prove ineffective, as it may be too late. The Chinese stock market is already overbought, and considering the plummeting financial numbers, an economic collapse may be unavoidable. The decline in China’s economy is also affecting other nations like Singapore, where the number of Chinese tourists has dropped by 30 percent. Thailand also has not been spared, and their economy may face a recession due to the fact that their manufacturing sector is fully dependent on a supply chain in which China is a major contributor. Experts estimate that the decline in China’s PMI will also cause some economic effects outside Asia, as most of the countries in the world depend on the Chinese production sector. The global economy has been in one massive bubble that has become increasingly bloated with debt. This slowdown in Chinese production could cause a historic crisis. China is struggling to save its economy and it appears they may have already lost the battle. History has taught us that bubbles will always burst, and China is about to learn this the hard way. When an economic collapse hits China, other nations will also be affected…
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