The Great Fall of China?

Has China's economic boom come to an end?

I've written quite extensively for several years about the power shift from the western world to the eastern world. We've seen that in the steady rise of Russia as a military power and the explosive rise of China, Hong Kong, India, Singapore, South Korea and Taiwan as economic powers.

The shift in power from the west to the east is prophetic. Nearly 2,600 years ago, the Hebrew prophet Daniel received a prophecy from God concerning the rise in the end times of two powerful nations he described as northern and southern kingdoms. (Daniel 11)

I believe those kingdoms are China and Russia, and I wrote about that before either nation began to grow economically, militarily and politically. China's economy has grown so rapidly that the Red Nation is poised to supplant the United States as the world's premier economic superpower.

However, in recent months, China's economy has cooled off to the point where the international markets have been rattled. China reacted by devaluing its currency in an effort to make its products cheaper and more affordable so that business would rebound. Obviously, that hasn't happened. 

China's currency manipulation has infuriated Republican presidential candidate Donald Trump who's convinced that the Red Nation is murdering the U.S. economy by devaluing the yuan. Here's what he said in a recent interview with CNN: "I've been telling everybody for a long time China's taking our jobs, they're taking our money. Be careful, they'll bring us down. You have to know what you're doing. We have nobody that has a clue." 

Certainly, Trump was referring to the bumbling and inept Obama administration that's allowed American businesses and manufacturing jobs to relocate to China while getting nothing in return except cheap products that were once manufactured in the United States. 

As Trump has aptly pointed out, China's economy has been built by American dollars. What he hasn't pointed out is that China's military is being built on the interest payments from the $1.3 trillion America has borrowed from the Red Nation. 

And so, the proverbial $64 trillion question is this: What does China's recent economic downturn mean? Is the communist nation going to collapse? If China does collapse, that would send shock waves across the world, beginning in Russia that's heavily invested in China's economy. 

While a lot of people would love to see that happen, China isn't going to collapse. Economic downturns happen everywhere and China's experiencing something that the older, western economies have experienced before. Remember that China's free-market economy is still relatively new. 

Why has China's economy slowed down? Because people aren't spending as much money as they did a few years ago. And that's because they don't have the money to spend. And when the money isn't there, the products don't get bought and sales go down. The industries that typically get hit the hardest in economic downturns are the manufacturing, restaurant and retail industries.

When the sales go down, companies reduce their inventories and they lay off employees because they can't afford to pay them. And when people lose their jobs, they don't have the money to buy those products that keep those factories going in places such as China. That's what's hurting China along with the heavily taxed and over regulated economies that are stifling economic growth in Europe and the United States. It's really that simple.

China will rebound. It may take several months or even a year or two. But the communist nation will bounce back as long as it continues to keep its currency low and offer incentives to companies to relocate to China. 

After all, socialism doesn't work. That's why China turned to capitalism. If you want to become a premier global economic and military superpower, you need money. And as long as nations such as the United States keep passing free trade agreements, companies will keep moving to places such as China where they'll be able to keep more of their money. That's good for them and good for China. And that's bad for the world.