November 8, 2010
Why China May Not Matter Quite As Much As You Think
Ok, it’s true that in China growth of 9.6%—recorded in the year to the third quarter—represents a slowdown and that, according to the IMF, China will account for almost a fifth of world growth this year (just over a quarter at purchasing-power parity).
Yet, when the Bank Credit Analyst, an independent research firm, asked what would happen if China suffered a “hard landing,” its answer was far less apocalyptic than one would expect. In fact, as it pointed out, at the start of the 1990s Japan accounted for a bigger share of GDP than China does today, and notwithstanding this, when in the first half of the 1990s its growth slowed from about 5% to 1% it all happened without any discernible effect on global trends.
It is hard to exaggerate the Chinese economy’s far-reaching impact on the world, but not impossible, after all... Read this October 28th Economist article to convince yourself (if you can).