China Shock Wave to Global Markets!

The “Wealth of Nations” rest on ‘Competitive Advantage’ and not ‘Comparative Advantage’ this adage has been proved once again by the Chinese Yuan depreciation.

The Yuan depreciation (Figure-1) was prompted by the sharp drop in 1Q 2015 exports (predominantly Industrial and high value added). Raising concerns of China’s adherence to USA in maintaining an overvalued Chinese Yuan since 2010 (Figure-1). Data shows that it does not help China’s objectives. Comparing 1Q 2015 with 1Q 2014 export values to EU and APEC tells us that exports declined by 10.2% for EU to USD 50.5 billion from USD 58.9 billion. The APEC region too showed similar results with export revenues declining by 12.0% to USD 259.6 billion from USD 296.1 billion . On the other hand exports to the USA improved to USD 89.7 billion from USD 80.6 billion (Figure-2).

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