The Real Global Threat From China’s Eroding Economy

By Harry G. Broadman (original source Forbes) 

“China’s “economic miracle” over the past 35 years has been the envy of many other emerging market countries; indeed, of some advanced countries too. Yet in just over a period of a few weeks, global economic officials are deeply concerned about the policy deftness of China’s leaders and the growth prospects of the world’s second largest economy. With many countries still trying to rebound from the recent financial crisis, this couldn’t come at a worse time.

So it is little surprise that headlines focus on the contagion from the confluence of China’s continuing trend of declining GDP growth, recent crashes in  the country’s stock exchanges, the sudden devaluation of the yuan, and significant successive easing of monetary policy by the Peoples Bank of China in an attempt to inject liquidity into a moribund banking system. It is the international effects of China’s “perfect storm” that is keeping policy makers and investors in New York, Frankfurt, London, Tokyo and Washington up at night—big time.”

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