China’s Dream Machine Loses It Mojo

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The final shoe to fall in the global recession is China. It is a large enough supplier of goods to the entire civilized world and much of the world which is not civilized that it might dodge a recession. How could the entire globe hit a slowdown all at once and hit China in the head?

China was supposed to be the one financial shinning light on the Earth with its 10% GDP growth and relatively modest inflation, at least for a large economy expanding at a tremendous rate.

There is now very hard evidence that the "China miracle" has lost it ability to tread on water without sinking. Manufacturing in the country slowed considerably in October.

According to the AP, "The China Federation of Logistics and Purchasing said its purchasing managers’ index, a broad measure of new orders, exports and other factors, fell to 44.6 in October." A number below 50 is considered extraordinarily bad.

The China problem may end up being as troublesome as the recession in the US, at least longer term. China’s new middle class has been an important consumer of goods from the West and Japan. Problems in the economy of the most populated country in the world could also contribute to stagflation as its demand fro commodities falls sharply.

Analysts still hail the "China miracle" and talk about it taking its place as the leader of the global economy with the largest GDP and more favorable balance of trade.

If things keep getting worse on the mainland, they may not even be asked to host the Olympics again.

Douglas A. McIntyre