With Europe in meltdown, the worst thing that can happen is for the Chinese economy to slow down. But it's happening.
As reported here, Chinese manufacturing has contracted for the first time in nearly three years. The purchasing managers index (PMI) fell to 49 last month, down 1.4 points from October, marking the first contraction since February 2009. .A reading above 50 indicates the sector is expanding while a reading below 50 suggests a contraction.
Much of this might be due to what's happening in Europe which China relies heavily on for its exports. If the European aren't buying, China's economy will be hit hard. The Bangkok Post tells us that China and Europe are inextricably interlinked. "The recent data leave little doubt that Asia is now starting to feel the impact of the latest global shock. As was the case three years ago, China is leading the way, with annual export growth plummeting in October 2011, to 16%, from 31% in October 2010 _ and likely to slow further in coming months. In Hong Kong, exports actually contracted by 3% in September _ the first year-on-year decline in 23 months. Similar trends are evident in sharply decelerating exports in South Korea and Taiwan. Even in India _ long thought to be among Asia's most shock-resistant economies _ annual export growth plunged from 44% in August 2011 to just 11% in October."
Analysts warn that Chinese regulators will struggle to stop the rest of the economy sliding into another financial meltdown.
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