Question

If China’s growth slows, what will be the impact on commodity prices?

Answer 1

We all know China is the world's largest exporter. It exports to good to many big and small countries including USA, UK, India, Australia, Indonesia, Canada, Brazil, countries across Europe etc. China is the fastest growing economy in the world with the growth rate of 10%. Its economy is the second largest economy in the world after USA. If China's growth slows down, it will have direct impact on commodity prices. If there is lower economy growth in China, production will also be less, when production of commodities will be less, its prices will shoot up, as the demand of the commodities will be higher and supply is less so price will go up. Commodities' prices will be higher in international market as countries import the commodities from China. On the other hand if prices of the commodities fall, it will be good for countries that import commodities from China, for e.g. Australia and Canada. The slow down in China will be negative impact on other countries too.