Tags: Faber | Greece | China | Threat

Faber: Forget Greece - China Poses Biggest Threat to Global Economy

Friday, 18 May 2012 08:57 AM

A slowdown in China poses the biggest threat to the global economy and not a Greek exit from the eurozone, says economist and investor Marc Faber, publisher of the Gloom, Boom and Doom Report.

Greece is teetering on abandoning the eurozone, which could roil global markets.

Big deal, Faber says.

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"I think the biggest risk is actually China because if you look at Greece, it's an insignificant economy," Faber tells CNBC Asia's "Capital Connection."

"Yes, they owe money, but the market knows that it's bankrupt."

European Union countries have been able to prop up the Greek economy but China, home to the world's second-largest economy, could majorly disrupt the global economy should it continue its cooling

"This has a huge impact on the economies of countries like Brazil, the Middle East, Central Asia, Africa, and Australasia, so these countries could slow down meaningfully," Faber says.

China is the largest single contributor to global economic growth, contributing 31 percent of worldwide gross domestic product expansion from 2010 through 2013, according to IMF data, up from 8 percent in the 1980s.

Chinese industrial output and retail sales data have disappointed recently, prompting the Beijing to cut the reserve requirement ratio on the country's banks to get them to lend more and stimulate the economy.

"That is a real and serious problem," says Xiang Songzuo, chief economist for the giant China Agricultural Bank, the Christian Science Monitor reports.

"The real demand for bank lending has been slowing down quite obviously," Xiang adds.

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