China’s long-term economic impact on world markets

China made drastic changes to try to save stock markets around the world.

A Chinese stock investor reacts near a display for stock prices at a brokerage house in Qingdao in eastern China's Shandong province Tuesday, Aug. 25, 2015. Chinese stocks tumbled again Tuesday after their biggest decline in eight years while most other Asian markets rebounded from a day of heavy losses. (Chinatopix via AP) CHINA OUT

SPRINGFIELD, Mass. (WWLP) – Tuesday, China made drastic changes to try to save stock markets around the world.

“An economic impact in one part of the world has an economic impact in other parts of the world,” said American International College International Business Professor Gary Lefort.

After nearly 40 years of steady economic growth, China’s economic momentum has slowed down, way down. For days, stocks plummeted in China, causing a ripple effect of panic on Wall Street, and in Asian and European markets.

“The world is getting smaller and smaller and everything’s interconnected. Our country borrows a lot of money from China. Our businesses are trying to do more business there,” said Bill Hadley of Longmeadow.

American International College Professor Gary Lefort said it’s because of events in the United States and other countries that caused China’s economic slowdown. Tuesday morning, the U.S. stock market rebounded after China’s Central Bank cut its key interest rate in an effort to boost its economy.

Lefort told 22News while changes on Wall Street may be temporary, you will notice longer term effects of China’s currency devaluation. He said they’ll be exporting goods at lower prices and importing goods at higher ones, and that could affect businesses here. “Our exports become more expensive because the Chinese don’t have as much currency as before because it’s been devalued, and so that will have an impact as well,” said Lefort.

Economists predict this is far from over: China may have made changes Tuesday to help improve global markets, but there’s still uncertainty in the world’s second largest economy. As we’ve seen this week, economic changes in one country can quickly impact the world.

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