The "China factor" was supposed to save the world from recession and catastrophe. Now it looks like it will speed up the nose dive and make the landing even harder.
The latest survey shows china's manufacturing has contracted to its lowest level on record, reports Bloomberg. As the world slips into recession, order books are being cut in China. And that signals disaster for the global economy.
Dr Doom, Nouriel Roubini, warns that China is now headed for a hard landing. As for the recent pick up in share markets? That was just a "sucker's rally".
"Let us be clear what we mean by hard landing. In a country with the potential growth of China, a hard landing would occur if the growth rate of the economy were to slow down to 5-6% as China needs a growth rate of 9-10% to absorb about 24 million folks joining the labor force every year; it needs a growth rate of 9-10% to move every year about 12-14 million poor rural farmers to the modern industrial/manufacturing urban sector. The whole social and political legitimacy of the regime of the ruling Communist party rests on continuing to deliver this high growth great transformation of the economy. Thus, a slowdown of growth from 12% to 5-6% would be the equivalent of a hard landing or a recession for China. And now a variety of macro indicators suggest that China is indeed headed towards a hard landing."
That points to one thing: an ugly and contracted 2009.
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