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Europe May Suffer Significant Losses if China Launches Currency War

© REUTERS / Tyrone SiuA man walks past an advertisement promoting China's renminbi (RMB) or yuan, U.S. dollar and Euro exchange services at foreign exchange store in Hong Kong, China, August 13, 2015
A man walks past an advertisement promoting China's renminbi (RMB) or yuan, U.S. dollar and Euro exchange services at foreign exchange store in Hong Kong, China, August 13, 2015 - Sputnik International
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A global currency war may heavily affect European countries, especially France and Italy. Cheap Chinese exports could have a negative impact on the “emaciated” industries in these countries and, thus, endanger the stability of the Eurozone, DWN wrote.

China's exports have been of great importance not only for China itself, but for the rest of the world as well.

In the span of 15 years China has become the world’s largest exporter, the newspaper reported. The rise of China has massively influenced US, Japanese and European industries and led to a partial de-industrialization of these economies. Their shares in total world exports have changed considerably and, all in all, regressed in varying degrees.

A man talks on the phone inside the Shanghai Stock Exchange building at the Pudong financial district in Shanghai November 17, 2014 - Sputnik International
China's Export-Boosting Yuan Devaluation Will Continue
Until about 2003, the share of the Eurozone countries in the world exports had amounted to around one-third. Now it has fallen to just over 24%, with France and Italy being affected the most, DWN wrote.

These trends are likely to continue throughout 2015 as the ongoing devaluation of the yuan will make Chinese exports cheaper and more attractive.

However, at the same time, a continued downturn in Chinese growth could spill over to other countries as well, especially to emerging economies. 

“If China is unable to come out of its current slump, “vulnerable countries such as Brazil, Russia, Turkey, might topple into more severe crises,” Director of Brazil’s Institute for Economic Policy Studies Monica DeBolle said in an interview with Sputnik.

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