China is a country of winners and losers, but at the moment, it is losing ground.
The world trade situation is now worse than it was at the end of last year, with the US and the European Union on track to overtake China as the world’s biggest economy.
What happened to the global economy?
The global economy is facing a massive and growing debt crisis, which is already costing the US$1.6 trillion a month in interest payments and could cost even more, according to a study by the Institute for International Finance (IIF).
The study says the global financial system, including the international financial system as a whole, is at “a critical juncture”, with its ability to function and its capacity to absorb shocks and uncertainties in the future “under severe stress”.
The “financial system is facing unprecedented structural and financial stress”, the study says.
“It has become increasingly difficult for the global system to absorb and adapt to shocks and to adapt to changing business environments.”
In addition to the US, the IFF estimates China will be hit with a record $2 trillion in debt and $1.4 trillion in trade surpluses during the next five years, making it the third-largest economy in the world behind the US with $4.2 trillion and the EU with $2.6 billion.
The IFF report says the economic situation has become so dire that it will be “inevitable that the world will experience a crisis of confidence and trust” in the international economy.
According to the Iffa, the world economy has been hit with the highest rate of economic growth since the end, which will put the economy on a “rapid decline” over the next three decades.
In a sign of how vulnerable the world is to economic collapse, a recent study by consultancy firm PwC predicts that global financial markets could see their biggest daily losses since the global crisis hit.
“We are entering a time of extreme risk, where financial markets will experience daily losses of up to $20 trillion by 2030,” the study predicts.
A study by Oxford Economics found that the “rise of populism and anti-establishment sentiment” is likely to make the financial system even more vulnerable to a global economic collapse.
While the IFS says China’s economy is “on track to reach its potential” and that it “could achieve sustained growth”, the US economy is still projected to grow by an average of 7.2% over the same period.
What’s the latest on the world trade?
On Wednesday, China signed a $US5.2 billion ($7.9 billion) trade deal with Canada, marking the first time the two countries have worked together on trade since the 1979 signing of the China-U.S. Free Trade Agreement.
China has also signed trade agreements with the EU, Japan, Canada and Mexico, the third country to do so after the U.S., the EU and Japan.
Meanwhile, China has already signed deals with South Korea, Taiwan and Vietnam.
Last week, China and Russia signed a deal on the sale of liquefied natural gas to the European market, the first ever of its kind in the region.
But while China is the world leader in trade, the country is also the world capital of manufacturing, which accounts for 40% of the global gross domestic product.
Despite the massive amount of trade, China’s GDP is only slightly more than twice the US’s.
How much of the trade is made in China?
In 2015, China had $US2.7 trillion of global trade.
That equates to just 0.3% of global GDP.
China has the world third-biggest economy in terms of trade and its biggest trading partner, behind the U, which has a total trade of $US3.6tn and the US which has $US4.9tn.
That means China accounts for about 60% of all world trade, with Mexico accounting for the other 20%.
The U.K., Japan and Germany all account for the bulk of world trade.
However, despite the trade deficit with China, the U S and the U K have some of the lowest trade barriers in the entire world, the report said.
It said that the US and the UK were the top two exporters in the EU but China is also a significant supplier of goods and services to the EU.
So how did the world get to this point?
China’s trade with the rest of the world rose from $US10.5 billion in 2005 to $US19.5 trillion in 2016, a jump of 70% according to the Uffs Global Trade Report.
At the same time, China is currently the world biggest importer of goods, with imports increasing by just 1.6% in the same year.
Even so, the biggest culprit for the decline in the global trade is the US.