As China Sneezes, Will the World Catch Cold?

As China Sneezes, Will the World Catch Cold? YaleGlobal. Vikram Mansharamani. September 17, 2012.

The world became accustomed to double-digit growth in China. But such growth wasn’t sustainable, as Europe and the U.S. struggle with debt. Analysts concede that China’s growth, fueled by easy credit, is slowing. Vikram Mansharamani outlines the implications: In recent years, China has snapped up a lion’s share of commodities – steel, cement, aluminum, iron ore – and now demand is slowing. Inventories are piling up in China’s factories and ports. Emerging economies that contribute to China’s supply chain will feel the pinch. “A material slowdown in China will affect other emerging markets despite arguments about decoupling,” Mansharamani reports, adding that pooled funds have created more financial connections than ever before. Investors who counted on heavy growth for China and its suppliers can expect a portfolio hit. Predictions that China would surpass the U.S. as the world’s largest economy could be off by years or decades. Mansharamani expects China’s leaders to direct resources at promoting social stability, encouraging consumption and ultimately strengthening the economy. [Note: contains copyrighted material].

[HTML format, various paging].