For many years, China economic growth has increased tremendously in two-digits percentage. Even when US economy growth decreased, China never faltered. However, in this article, it is said that China’s economic growth is declining mainly due to unnecessary infrastructure (building skyscrapers and cities that are not utilized) which China can’t cover the costs. Investors are alert of the situation because China is 10% world GDP. If it keeps declining, it will have a huge impact globally. When you have a very low base, economic growth tends to increase rapidly until it slows down or reaches plateau. It slows down because other countries have cheaper labour (More people are moving up the social ladder to middle class).

The question is “should investors be worried?” Personally for me, I think they should because China has a collaboration with stake capitals and private capitals called “Wealth Management Product”. They manipulate people’s mind by saying it has 6% to 7% interest rate. Investors believe that it is safe to invest money in their bank.

However, the money is not used properly. In fact, the money is used to build a “ghost city”(wasted on infrastructure investment). So, they will not be able to pay their debt. It keeps going on for so long because of non-transparent financial product and ponzi financing. It will continue until something major happens and the bank cannot cover the problems anymore. So government has to fix it by using the reserved money that China has. This will cause break down of economic growth in China and finally affect the whole world. So, it is better to investigate and make a thorough research before investing in China companies.

Source: http://www.cbc.ca/news/business/slowing-chinese-gdp-growth-worries-investors-1.2559940