Wednesday, September 12, 2012

Will Mainland China’s Economic Hard Landing Trigger A Deeper Global Recession?

As the Chinese Premier reassured us in his keynote speech in the World Economic Forum in Tianjin that Mainland China can still maintain a stable economic growth for years to come, but will an economic hard landing deepen the current global recession?

By: Ringo Bones

As the Chinese Premier Wen Jiabao reassures every globalization savvy entrepreneur that his country – currently the second largest economy in the world – can still maintain stable economic growth for years to come in a keynote speech at the World Economic Forum in Tianjin, many top tenured economists are somewhat worried that a Mainland Chinese “economic hard landing”, that is a sudden downturn in domestic demand and production, could trigger a deeper global economic recession. But are fears of the global consequences of a Mainland Chinese economic hard landing exacerbating the Eurozone crisis and the still fragile American economic recovery truly justified?

Well, the numbers don’t lie. Back in September 10, 2012, Mainland Chinese economic data shows weaker than expected trade where the Mainland’s imports dropped 2.6% - fuelling the fears that the projected 7.5% economic growth for 2012 might not be met. Despite of the pessimistic economic data, the Chinese Premier in his keynote speech at the Tianjin World Economic Forum calls for fresh economic stimulus via tax cuts and boosting domestic consumption to hit the projected 7.5% economic growth for 2012. The said measures could also prevent a dreaded economic hard landing for the Mainland Chinese economy, although neither the Chinese Premier Wen Jiabao nor the top economists around the world assume that such measures could return Mainland China’s double-digit annual economic growth back before the global credit crunch. In the very least, this rather “stopgap” measure only maintains the preexisting foreign investor confidence levels for Mainland China.

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