WASHINGTON ¨C It¡¯s time to worry about China.
On any list of calamities threatening the world economy, a China crash ranks at or near the top. Just what would constitute a ¡°crash¡± is murky. Already, China¡¯s sizzling rate of economic growth has declined from 10 percent annually ¡ª the average from the late 1970s until 2011 ¡ª to 7 percent, which is still high by historical standards. The question is whether the deceleration continues and growth goes much lower.
A faltering China could tip the world back into recession. Because China is a huge customer for raw materials (grains, metals, fuels), their prices would remain depressed. China¡¯s surplus capacity of basic industrial goods, such as steel, would be increasingly exported, also depressing prices. This would dampen any recovery in global business investment. Confidence would suffer.
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