By: Danielle Apfel
Unsurprisingly, things in China have steady grown worse over the course of the last week.
Over the summer, China’s economy has taken a huge hit, as has been demonstrated by drops in the value of China’s currency as well as in the global market. In order to counter the effects of a steadily dropping economy, the Chinese government tried various strategies to manually affect the market.
This week’s attempted solution was to devalue the Chinese currency, the Yuan, in order to increase domestic consumerism. By devaluing their currency, the government was hoping to make Chinese-made goods cheaper and more affordable, which would in theory increase domestic consumerism, and decrease the purchase of goods and services abroad. Not only would this help Chinese citizens, but it would also create an incentive for foreigners to continue to invest in China.
Because no market can be completely independent, the global economy exists as a catalyst between nations’ individual markets. The increasing interdependency amongst nations with large economies can therefore both help, and hurt, foreign markets and consumers. As is with the case in China, various currencies around the world also suffered from the decision to devalue the Yuan. Asian currencies especially, such as Singapore and South Korea, reportedly had drops in their market’s value after the Chinese government acted earlier this week.
Finding a solution to China’s growing economic troubles has not been easy. Evidently, the latest attempt was not as successful as intended. In order to balance the latest drops, China’s central bank has reportedly been working to help steady the currency rather than devalue it further. It remains to be seen whether or not the value of the Yuan can help stabilize the Chinese currency.
In un-economic related events, there were a series of explosions at a warehouse in the northern Chinese city of Tianjin this past Wednesday. It is estimated that at least 44 people were killed from the blasts, and more than 500 people were injured.
Though the cause of the explosions is not yet clear – or perhaps just not made clear to the public – it ahs been confirmed that the initial explosion came from a warehouse for a logistics company, where “dangerous and chemical goods” were reportedly stored.
Despite the summer vacation, it appears that China has lot on its plate.