The increase growth in China might turn out to be problematic

Beijing’s decision to launch a package of budgetary measures was crucial in bringing the global economy on track to recovery. But of course it has had side effects; during the fourth quarter of 2009, the Chinese economy grew by 10.7% which shows that risk again might be overheating high inflation and bubbles in asset markets. And when the force leading the global recovery is threatened, then the international financial scene might be endangered too.

The global economy has been hit by the biggest lightning it has ever experienced since the Second World War and the top exporters saw their record sales drop by 20% to 30% in 2009 which reflected that the global GDP, according to the World Bank declined by 2.2%. The decline was mainly driven by the deep recession which slipped major developed economies, with result a shrinking GDP by 3% in the USA and 5% and 6% in Japan and Germany respectively.

With the U.S. and major European economies suffering; Asia’s exports registered a sharp decline last year in result of the chained reaction. Chinese exports fell more than 20% in early 2009 and actually started to recover in December. At a worldwide level export revenues fell last year by 16% according to the Oxford Analytica, bases upon figures published by Forbes.

Nevrtheless during all this chaos China proved to be bullet proof as its GDP grew by about 7% in the last quarter of 2008, by 7.9% in the second quarter of 2009 and by 9.1% in the third quarter of 2009 not to mention that it still presents double-digit growth, which seems to satisfy the markets.

Oxford Analytica analysts however, stress that the accelerated pace of China should be a concern rather than a relief. The 585 billion dollars spent in the economy by the Chinese government has not only translated into GDP growth, but also to increased lending by 30% in 2009 which might be worrying as a substantial strengthening of the country’s exports, which would allow the government to withdraw all emergency measures.

Therefore China does not support the worldwide economy but on the contrary it relies its future on the global recovery and its well being cannot be predicted accurately as in reality it relies heavily upon the growth and health of both the US and the major economies of Europe.