China Falters, and the Global Economy Is Forced to Adapt, Article Review Example

Keith Bradsher. “China Falters, and the Global Economy is Forced to Adapt.”The New York Times – August 26, 2015 http://www.emergingmarketsesg.net/esg/2015/08/26/china-falters-and-the-global-economy-is-forced-to-adapt-the-new-york-times-august-26-2015/

Summary

In his article, “China Falters and the Global Economy is Forced to Adapt.” the reporter Keith Bradsher describes how international organizations and countries are having to respond to the new economic reality in China, as once sure bet of investing in China becomes doubtful. In the article, Keith suggests that deepening economic fears in China are forcing a rethinking of the conventional wisdom that investing in China is a sure bet.  In the opening sections of the article, the author provides examples how multinational such as BHP Billiton, that were once confident with their target market are at risk are forced to rethink their strategies. According to the author, BHP Billiton could spend heavily mining raw materials since it was sure of it biggest customer’s china. However, due to the slowing of the Chinas economy the company is now pulling back. Its profits are falling, and it is cutting it investment budget by more than two-thirds.

In the section that follows, the author described how in the past, the rapid growth of Chinas economy reshaped the world economy creating a strong driver of corporate strategies and financial markets. China economy appeared to have a one-way direction that would provide a steady source of profit and capital. However, the recent deepening of the China economy is a cause of concern to many multinationals organizations and countries who depend on China.  The author suggests that, for those companies, which had built their strategies and plotted their profits around Chinas rise, they need to shift their focus. In the next paragraphs, the author describes how industries have been affected. According to the author, industrial and multinational companies face the most pressing concerns as they scrabble to the profit slide from weaker consumer’s consumptions. Many manufacturers, including Smartphone makers, automobile makers have all been affected.  Multinational companies are not the only one feeling the pressures. The China close trading Countries such as Russia and Brazil are also affected by the deepening of the economy.

In the crossing section, the author highlights what the China and it close trading partners as well as multinationals are is doing to manage the situation in response to the deepening of the country’s economy.  For instance, the author notes that Multinational and countries that depended on china’s growth need to adjust their inventories to the new normal. Companies and countries that depend on Chinas economy need to have a realistic look at China’s economy and make necessary adjustments other.

The Critique

After reading the article, I feel that with the use of considerable amount of deductive and inductive reasoning the author has properly presented his case. In other words, the article is well written in a clear and concise language. The author successfully uses simple examples such as the case of multinational companies such as BHP Billiton and Russia to illustrate how deepening economy in China has affected multinationals and what they are doing to survive.

The main points of the articles are that multinationals and countries that heavily depend on Chinas economy are being forced to adjust due to the deepening of Chinas economy. The author particularly suggests that the global economy is a now at risk since the past few weeks. As a result, many countries and companies, those that trade with China are at risk as well.

China’s economy is the second largest in the world, and many other economies depend on it. The implication of this is that China is now exporting uncertainty globally with potential for choppier growth and volatile swings. According to the author, companies and countries that heavily rely on china’s economy need to adjust to the new reality. The deductive reasoning used by the author explains it better. A case in point includes where the author illustrate how the Brazilian economy has been acutely affected by the deepening china’s economy. For instance, the author notes, “the country is already faltering as the weaker china’s imports of soya beans and minerals have jolted the entire Latin America” the uncertainty in China could limit the maneuvering room for the official to address the sluggish Brazilian economy.   Using deductive reasoning, Keith clearly illustrates how the multinational and countries are adapting to the situation in China. For instance, BHP is pulling back, the company is cutting its investments spending budget by more than two-thirds. Vale, the Brazilian mining giant, is struggling to unload assets. “What manufacturers are doing is to adjust their inventories to the new level. The author also notes that similar adjustments are taking place around the globe. With these examples, the writer Cleary explains to the reader his point and makes the article easy to understand.  Besides, the examples help the author to argue clearly his points.

In conclusion, the article provides an interesting finding of how companies and countries trading with China can adapt to the new situations. The options that the article provides are especially relevant to Chinas trading partners and multinational organization considering restructuring and downsizing their workforce while attempting to retain the most important human capital.

The tie-in

What motivated me to choose this article was the title, the link between what is happening in China, and it influences to international business. The article describes one of the examples of impacts globalization. Globalization is the movement to a more interdependent and interconnected world economy. It is one of the profound factors, which are affecting lives in the world today. Globalization has not only affected individual lives, but it has affected the way companies conduct business around the world (Chapter 4 Globalization).

What interested me the most is the manner in which the author illustrates how the global economies are connected and how a crisis in one economy affects other economies (chapter 2 economics). In addition, the article explains how downsizing of one economy can affect other economies.   For instance, Germany, which has for longer positioned itself to benefit from Chinese growth by specializing in machine and tools and other factory machines and equipments, is now at risks. The major Germany exporters are feeling the pressures. The crisis in the chain has affected the interest rate, and stock markets of many other countries, especially those that heavily trade with China. In addition, the article links the slow growth of most of the European economies to the situation in China (Chapter 16, investment).

Most importantly, the article explains how important it is for multinational to forecast their financial needs (Chapter 15, Finance). For instance, the article suggests that car manufacturers were slow to see the economy declaration and waited for long, thus suffocating their factories. In addition, the situation in China is making the investor consider investing in China. For instance, due to the crisis the price the China is willing to pay for the gas are dropping. Thus, it may no longer be worth building a pipeline (chapter 16 investments).

Work cited

Keith Bradsher. “China Falters, and the Global Economy is Forced to Adapt.”The New York Times – August 26, 2015 http://www.emergingmarketsesg.net/esg/2015/08/26/china-falters-and-the-global-economy-is-forced-to-adapt-the-new-york-times-august-26-2015/