Chinese economic slowdown threat to worldwide revival
Despite the fact that the Chinese economy has shown signs of revival over the last few weeks there is growing concern that an economic slowdown could just around the corner and could potentially unravel the worldwide recovery currently underway. The World Economic Forum believes that there is a 20% chance of a serious economic slowdown in China in the short to medium term which could lead to economic losses in the region of $250 billion to $1000 billion.
Despite the fact that the Chinese authorities appear to have handled the ongoing crisis better than expected, under the surface it would appear that high credit growth is behind the revival. There is now the risk of creating an asset bubble and a volatile growth path in the short to medium term which could lead to a similar situation which we saw in the US prior to the credit crunch. While we are now more aware of what goes on within the Chinese economy than ever before, there are still many areas of secrecy and mystery.
The ongoing disagreement with search engine giant Google has attracted the attentions of the financial press over the last few days but if an economic slowdown is just around the corner this spat will pale into insignificance!
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