Just when the world could use some good economic news from the East comes another dose of gloom.
The locomotive that has pulled the global economy through hard times over the past three years – China – appears to be running out of steam, weighed down by the financial crisis in Europe and a sluggish US economy.
A survey released Wednesday by HSBC bank showed that China’s manufacturing sector shrank sharply in November in the biggest fall for nearly three years.
The news pushed Asian stocks down by more than 2 percent, but in reality the survey reading only confirms what everyone had expected. If American and European consumers are not spending the way they once did, it is not surprising that the Chinese factories feeding their appetites have slowed their production lines.
What is worrying to the rest of the world, though, is that Chinese policymakers are making no bones about their intention to take care of their own problems before helping to solve anyone else’s.
The man in charge of China’s financial and trade policy, deputy premier Wang Qishan, told visiting US Commerce Secretary John Bryson bluntly over the weekend that “an unbalanced recovery would be better than a balanced recession.” In other words, a stronger Chinese economy still running a trade surplus with the US would be better for the world economy than a slowdown in China itself.
Washington has been desperately pressing Beijing to boost domestic Chinese consumption and to rely less on exports; that would give other countries a chance to sell more products into China and export their own way to growth, in a more balanced global economy.
That does not seem to be China’s priority as it battens down the hatches and prepares to do whatever it takes to keep its economy growing. Mr. Wang did not mince his words Saturday, when he warned that “the one thing we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” according to the official Xinhua news agency.
For an economy that has largely powered its recent growth by selling more and more to the rest of the world, a chronic global recession would be the worst possible news. And bad news coming in to China is now coming back out just as bad.