The Global Stagnation and China

China, now the world’s second largest economy after the United States, “is not immune” to the general economic slowdown, warns IMF Managing Director Christine Lagarde. “Emerging Asia is also vulnerable to developments in the financial sector.”

So sharp were the IMF’s warnings, dovetailing with widespread fears of a sharp Chinese economic slowdown, that Lagarde was forced to reassure world business, declaring that stagnation was probably not imminent in China.

http://monthlyreview.org/2012/01/31/the-global-stagnation-and-china

Nevertheless, concerns regarding the future of the Chinese economy are now widespread. Few informed economic observers believe that the current Chinese growth trend is sustainable; indeed, many believe that if China does not sharply alter course, it is headed toward a severe crisis. Stephen Roach, non-executive chairman of Morgan Stanley Asia, argues that China’s export-led economy has recently experienced two warning shots: first the decline beginning in the United States following the Great Financial Crisis, and now the continuing problems in Europe. “China’s two largest export markets are in serious trouble and can no longer be counted on as reliable, sustainable sources of external demand.”