China creating nearly three times more small businesses per year than the U.S.

Following the 2008 Credit Crisis, banking policies changed as lending to and for small businesses became a risk that these institutions decided was far too costly when they could simply borrow from the Fed, and arbitrage profits from the buying of Treasury Bonds.  And because their primary lending became directed more towards the investment side of their businesses, and to major corporations, small businesses that make up the bulk of America’s job market began to decline in record numbers.

But even as the U.S. was allowing its own general economy to collapse in favor of funding corporate stock buybacks, across the Pacific over in China, their expansion of small businesses began to take shape, and over the past seven years has seen the Far Eastern economy not only move to the top spot in global business expansion, but is now creating nearly three times as many new businesses per year than the U.S. is.

Despite the economic slowdown in China, the country is outpacing the rest of the world in creating new start-ups, according to a study by the international accounting and consultancy network UHY.

The number of new Chinese businesses created annually has nearly doubled since 2010, increasing from 811,100 to 1,609,700 last year, the research revealed.

“New business creation is accelerating more quickly in the UK than in any of its Western rivals,” the UHY report said.

India came third on the list with a 46 percent increase in the number of start-ups. Almost 100,000 new businesses were created in the country last year.

“Western European economies tended to see a bigger increase in the number of new business ‘births’ compared to other developed economies,” the report noted.  The UK, Italy, Germany, and France had increases in the number of new businesses higher than the G7 average of 31 percent. - Russia Today

According to a Gallup Poll from last year, entrepreneurial startups in the U.S. have been declining since the late 1970’s when they reached their peak of a 16.5% annual increase.  However, following the 2008 crisis and the subsequent Great Recession, a new phenomenon occurred where not only did American business startups decline in number, but also the number of small business that failed were far greater than the number that were actually started.  And by a whopping -70,000 per annum.

In the 1920’s, President Calvin Coolidge once said, “the business of America is business”.  But 90 years later, this foundation has changed and one could now say that the business of America is debt and corporate buybacks.  And as America declines as the global leader for job creation and business startups, this position is quickly being filled by the world’s number one producing nation in the world, with the rise of China’s middle class mirroring the fall of the same class across the Pacific in the U.S..

Kenneth Schortgen Jr is a writer for,, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.

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