Drafted by：Marco Flavien
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Euro Zone debt Crisis Warning: China a forerunner for global Downturn
A global economy slowing only gently would be an immense relief after a fraught end to 2011, but it is far from guaranteed. Greek debt discussions could retract next week in a tussle over the size of losses banks that must to face. Based from Bradley Associates World Current News, the anxiety over Iran’s nuclear program continues to threaten oil markets. While, U.S data surprisingly showed the weak retail sales and a rise of unemployment last week, a reminder that the U.S recovery is not yet out of the woods.
So, even as signs suggest only a slight easing in global growth this year to a pace around 3 percent, the pitfalls are numerous. Mainly, among them is China. Data on Tuesday is expected to present growth in China, the world’s second-largest economy, cooled in the fourth quarter to 8.7 percent from a year earlier, against 9.1 percent in the prior quarter. It would be the slowest speed of growth since mid-2009 when the global economy was crawling out of a deep recession. In addition, the biggest question is how much of the slowdown can be blamed on slackening worldwide demand for China’s exports and how much on weakening domestic growth. According to Bradley Associates World Current News, If China’s central growth is stalling, that would put yet another drag on countries such as Germany and the United States, which are relying upon strong exports themselves to help compensate for the sluggish growth at home. U.S trade data for November was slightly stimulating on that score, with exports to China up by 2.1 percent to their highest level in almost a year. However, data from China revealed that in December demand slackened and imports from the United States which fell down to 2.7 percent, and the nation’s overall trade surplus fell to a three-year low down, raising alarms around the world of a very difficult landing. A pointed downturn in Chinese demand would also spell damage to investment exporters such as Australia and Brazil, whose fortunes are progressively tied to China’s. Brazil’s consumers already are pulling back sharply, and the central bank next week is expected to reduce interest rates to 10.5 percent, the fourth slash since August to support the declining growth. Figures from other Asian countries offer a few more clues on how China’s domestic economy is controlling up. Exports to China are a complex indicator because it is never entirely clear how much is destined for domestic ingestion and how much represents partially finished goods ultimately heading to the United States or Europe.
Nevertheless the pattern is clear: the flow of goods into China is halting, including from other Asian countries. Taiwan’s export growth in December was the lowest in more than two years, and exports to China fell 2.9 percent from a year earlier, a second straight month of negative readings.