Money Matters | What happens to the world’s economy should China sneeze?
China’s economic adjustment challenges are as well-known as they are challenging, but I feel sufficient policy flexibility exists to steer the economy to a lower equilibrium in a managed, ordered way.
Should China sneeze, would the world catch a cold? Or catch the flu? Or something worse?
I ask, because over the past few months, the flow of economic data from the world’s second-largest economy has been underwhelming to say the least.
Just in the last week, a whole slew of industrial, consumer, property, trade, and forward looking sentiment indicators posted either year-on-year declines, or missed analyst expectations, or did both.
Inevitably, this has prompted questions about whether China is experiencing a mid-growth cycle wobble - from which it will soon emerge unscathed - or whether the weakness is a portent of something more worrying; specifically an end-of-cycle inflection point.
It’s only right to take the deceleration in China’s macroeconomic momentum seriously, but it’s also important not to read too much into the wailing and gnashing of teeth that routinely accompanies the publication of major economic data from China.
