What is recession?

Recent news that China is going to Recession, what benefit China may get doing this?

• Recent news that China is going to Recession, what benefit China may get doing this? Recent news that China is going to Recession, what benefit China may get doing this, what could be the impact of this action on world economy specially the economies of Gulf countries those are heavily depend on China. And more why china want to initiate the recession in their country, this will only create heavy unemployment, China does not have any fund problem they have huge amount with US, the country itself is very resourceful. They don't actually need much supply from other countries then why they want to go on recession when no credit crunch or money crisis?

• Answer:

  You say recession as if China chooses to go into recession! It isn't something they choose it is external and internal influences which cause recessions. China is going into recession because their customers of which they export to the USA and Europe are broke. Because their exports are falling to these countries their economy is contracting (which is what a recession means 4 quarters of GDP contraction) i.e. output is decreasing therefore overral (flawed) growth is contracting. Therefore they are going into recession. It is not something you choose. Also China has maybe 1.1 trillion of US$. Except you can't just dip your hand into this fund and spend this money as if it is a current account. It can be used to buy things overseas but you cant just spend it, it is far more complicated but its not just another bank account to spend. Thirdly which makes me think you're trolling again nobody chooses to go into recession. China could well attempt to buck the market and avert the recession. But this is generally futile. Averting I mean by stimuli and money printing. Except this does not work. Japan went down the toilet in the 1980s. They have been printing money like crazy as a stumulus to their building companies. Which is why you see all sorts of strange things like massive bridges leaving to tiny fishing villages. It has done NOTHING. Averting via stimulus is actually quite bad and it has the opposite consequences of what you intend in the middle to long term. In the UK for example let me goive you a few examples: Stimulus! Car scrappage scheme. The governemnt gave people £2000 to buy new cars. All this did was subsidise the car industries and increased the second hand market by £2000. Now the car market is even worse. Ok Ok! So another stimulus! 0.5% interest rates. Which saved many over indebted idiots who lied on mortgages. Except this is causing 10% inflation in the UK which means instead of the mortgages squeezing people, food, and energy are squeezing people instead. The government by putting interest rates to 0.5% also lost about 20bn in interest tax payments. And squeezed people even more. Thus in an Austrian economics school what China is doing is right. I.e. letting the bad companies collaspe and clearing out the dead wood from the economy. It hurts, but eventually once all the dead wood companies are gone the economy SHOULD in theory return back to growth (automation and outsource not withstanding).