CAN CHINA LEAD THE WORLD INTO A NEW ECONOMIC CRISIS?

The Chinese slowdown could plunge the world into a new crisis, many economists believe. Is China so bad, and does she have such a power of influence?

When China will fall asleep ... the world will tremble. The Chinese recession, if confirmed, will drag that of Brazil, which will cause the same for the US and Europe. The expected Chinese slowdown will have colossal consequences, since China makes up a third of global growth since the beginning of the century. China is seriously ill, and the global contagion is inevitable.

China's growth is slowing. Even if it falls to 6% or 5% this year, one can not speak of recession. This is a relatively difficult transition between two growth schemes. Since 2011, China is trying to be less dependent on exports and develop its domestic market. Domestic demand remains weak, however.
This slowdown questioned China's ability to switch to an endogenous growth. The economy has excessive debt, speculative bubbles have multiplied. China has failed to initiate something virtuous on the domestic front. Meanwhile, the rise in wages that made its exports less competitive, forces it to devalue its currency to boost its foreign trade. China is in midstream, not knowing in which direction to turn.

Perhaps it is only a crisis of growth. But why China would lead the world into turmoil, starting with Brazil? Brazil is already in recession because of China. The growth was led between 2005 and 2012 by massive raw material exports to China. The decline in Chinese imports has been fatal. In return, Brazil imported Chinese products, contributing to the dynamics of world trade.

This dependency of China is evident in the case of Brazil, but it is the case in all countries. China accounts for 11% of imports in world trade. When it slows purchases, all exporters receive a kickback. This is the case of Germany, particularly exposed, where industrial productivity has been falling since 2011 and Europe is indeed threatened: one can not say that emerging countries need to support Europe's growth by purchasing their products. China's closure feeds a judgement of globalization.

China's influence on emerging markets is considerable, and the global economy is not going very well. Europe is a big stone. A new crisis is not impossible, but a return to recession could come from many poles. The eyes of the world have turned to the United States, where growth occurred for the last six years. Or to India, cited as a possible relay of China.

If China's failure does not necessarily plunge the world into recession, it seems to question the model of growth driven by trade flows. There will be more growth in the manner of the past. Anyway, the world has achieved the environmental limits; the Tianjin explosions just remind it.