Tags: china | Crash | global | Recession

Foreign Policy Journal: China May Crash First, Sparking Global Recession

By    |   Thursday, 12 Jul 2012 01:23 PM

The United States faces many dangers, but China might crash first and send the global economy into a recession.

"Businesses are taking fewer loans," Trefor Moss, a Hong Kong based journalist, writes for the Foreign Policy journal. "Manufacturing output has tanked. Interest rates have unexpectedly been cut. Imports are flat. GDP growth projections are down, with some arguing that China might already be in recession."

Premier Wen Jiabao set the country's 2012 growth target at 7.5 percent. That would be the lowest since 1990, Moss notes.

Moss lists five "real-world" signs of the coming Chinese economic apocalypse.

Its $586 billion stimulus that saved it from the global recession in 2009 has to be paid back by local governments. Fire sales of government property are everywhere. For instance, the city of Wenzhou plans to action off 1,300 cars, most of its fleet.

Social unrest is increasing. For instance, migrant workers recently rioted in Guangdong province.

Wealthy Chinese have lost confidence in the Chinese economy. They're are sending their money overseas, buying foreign luxury goods, real estate, and other investments overseas. Many are thinking of relocating permanently.

Despite summer, Chinese have turned of their air conditioners to save money, which has sent coal prices plummeting. That may put another dent the global economy, decrease demand for Chinese exports even more.

Pork prices have fallen so much the government had to step in and buy pork to stabilize prices.

China has bigger problems than the U.S. and will be the first to crash, concludes Paul Farrell, writing for MarketWatch. "China's faltering economy has been wreaking havoc on the confidence of Chinese consumers in recent years," Farrell writes.

China, he warns, might export its catastrophes to the U.S., intensify America's fiscal crisis, and plush the U.S. economy into another recession.

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