Tuesday, February 18, 2014

A Growing Mainland Chinese Middle Class: A Threat To The Global Economy?



Even though they are something for The People’s Republic of China to be proud of but is the growing Mainland Chinese middle class a threat to the global economy? 

By: Ringo Bones 

The growing Mainland Chinese middle class might be the envy of the rest of the world’s tenured economists as their taskmasters henpeck them on why their respective countries mimic the economic growth of Mainland China. But is the growing Mainland Chinese middle class eventually destabilize the global economy? 

Economist tenured by the BBC may have this all recently figured out on why a growing Mainland Chinese middle class could eventually trigger an economic contraction of their countries very own economy if not of the rest of the world. The growing Mainland Chinese middle class seems to be spending most of their disposable income on food and endangered species related products, instead of American and EU made luxury goods. The increased demand on food by the growing Mainland Chinese middle class had been inexorably hiking up food prices around the world and sadly on the loosing side are the middle class of the crude oil producing Middle Eastern states with weakening purchasing power. 

Though there’s not yet a repeat of the 2008 Egyptian bread riots, any more hikes in the price of basic foodstuffs could trigger political instability in the wider crude oil producing regions of the Middle East. Political instability in the Middle East more often than not results in higher crude oil prices thus more expensive gasoline in the retail pumps in Europe and America. And as gasoline becomes more expensive in America and the EU – the world’s two main purchasers of Mainland Chinese manufactured goods – American’s and Europeans will soon have less disposable income to spend on Mainland Chinese manufactured goods and thus causing a contraction of the Mainland Chinese economy. Based on this overall economic picture, could a growing Mainland Chinese middle class and their increased demand on the global food supply eventually cause a global economic contraction?