Whose a Greater Concern?

It seems there are a lot of major issues in the world today, from the Venezuelan protests, to the continued problems in the Middle East, and the significant issue of Russia planning to annex part of Ukraine. The last issue comes with a threat of weakened US Russia trade, as the two major countries are at odds about Russia’s actions in Ukraine. However, when asked about what issues threaten US economic growth most, many economist agree that the major threat comes from China’s slow growth.

There are a few reasons Chinas slowed growth is seen as the biggest threat. For starters it has already occurred for the past two months, with both shrinking industrial production and slowing retail sales. On top of the internal issues, China currently has the worlds second largest economy. Such a large economy means that they have a significant impact on international trade flows.

Economist view Russia’s possible annexation of Crimea as an issue that will not likely directly affect the US. Instead they predict the annexation to negatively impact both Russia and Ukraine stock prices while only slightly spilling over into the US through energy markets. I understand the prediction of the energy market spillover, as Russia is a huge producer of crude oil and natural gases. However I don’t think that the consequences will stay in the Russia and Ukraine.

Taking a look at some of the political factors and some may see that Russia annexing any part of Ukraine will have much greater global impact. First, the US has always been considered the most powerful countries in the world, but through recent events countries have been undermining the authority of the US. Russia ignoring the threats from the US of consequences if they annex part of Ukraine is just another example of a foreign country ignoring the impact the US has. The other factor is the a nuclear free world. Back in the 1990s Ukraine agreed to give up its Soviet Union nuclear stockpile in agreement for the promise to remain a sovereign state with protection from other major world powers. Russia annexing part of Ukraine shows that the treaty was not upheld and will make it extremely difficult to convince other countries to give up their nuclear programs in the future.

So in the short run I’d agree that the Chinese economy is a greater threat to the US economy, but in the long run I could see Russia annexing Ukraine as a much greater issue.