If Greece weren’t enough, check out the problems in China

Global investors are anxious about a possible messy Greek exit from the Euro Zone and what that might mean for regional banks and economies. Yet there is another big area of concern for the world economy in 2012: China. The world’s second biggest economy behind the U.S. is decelerating and that has big implications for growth in Asia and elsewhere. Here are five reasons to be worried:

1)   The World Bank is forecasting Chinese gdp to fall to 8.2% in 2012 vs. 9.2% last year. That in turn could depress growth across Asia. The bank sees growth in the East Asia-Pacific region falling to 7.6% this year from 8.2% in 2011–and 10% as recently as 2010.

2)   China’s manufacturing sector has hit an air pocket. The closely-watched HSBC Purchasing Managers’ Index (PMI) fell to 48.7 from 49.3 in April and has been contracting for some seven months now, according to this BBC report.

3)   Slower Chinese growth is dampening global prices for iron ore and coal, a big source of export income for Australia and emerging markets.  Iron ore prices recently fell to $144 per metric ton, a low for the year.

4)  During the first quarter of 2012, Chinese home prices fell 18 percent. That’s a worry not only for the unlucky consumers who paid inflated prices in recent years, but also mainland banks.

5) One Credit Suisse analyst forecasts Chinese banks could face non-performing loans equivalent to 65% to 100% of their equity in coming years. Bank loans to Chinese real estate developers, manufacturers and local governments may be particularly at risk.

There’s more to fret about right now than just the Greeks.

Xavier Brenner

Xavier Brenner

  • bystander

    6) the GDP numbers have been inflated and schmoozed for years, but at this point they’re simply being fabricated out of whole cloth.

  • Maavi Nevo

    18% per quarter, if sustained for a year or more means what?
    Much much less meat and much much more rice, am I right?

  • Fredo

    The world economy has been a lie since WWII.
    The CIA has said the post WWII economies are going to collapse.

  • Jtrawson

    NO credit rating system! Imagine that.
    About 10 years ago, the economy slowed and the government was trying to figure out how to get people to pay for all the cars they bought.
    This ought to be interesting.
    I wonder how you spell TARP in Chinese?
    Won’t matter much to most of the country. If you live outside those huge cities, you’re at subsistance living conditions for about a billion people.

  • crystalball

    Sooooo… what are the “big implications?”

  • Ragnarocker

    I just cant wait for a false economy to falter, who would have known?

  • PRRWRITER

    China was experiencing a collapse in real estate last year. I visted Shanghi and Bejing and observed over a week 100, 40-50 story high rise apartments under construction but only 2 (two) were actively being worked on in the 2 cities.

    It didn’t take genius to figure out they were in the same big trouble  as we were in the US!

  • RobinSteele

    You know, when you steal all the ideas and jobs from your biggest customer, sooner or later they will simply stop buying from you. Between the bank’s absorption of the money supply, upcoming changes in the fundamentals of manufacturing, and the American consumers weariness of material goods, I would say China’s best bet is a return to agriculture. 

    • Miguel Ortiz

      good point, one of the best things here in america is that we keep inversting and reinventing ourselves in the agricultur sector and in one season we can produce more than enought for us and also to export all over, and in tech and energy , etc not so good like before but we keep it up. we cannot be the leader in everything i mean we still the leader in most of the stuff.

  • http://www.facebook.com/rqkenney Rob Quaid Kenney

    You can only sell so many back scratchers, fly swatters and
    yo yo’s……..

  • johnlavery

    BLUF: Getting Obama out was the last hope of avoiding a GREATER DEPRESSION! Between the US, Euro, and China’s horrible fiscal management (mismanagement) we are facing a terrible reset to true value. If I were you, I would be moving money to safe haven, refi at lowest possible rate, off-load any debt, and be planting my victory garden. There is a better than good chance the US “fiscal cliff” will hit, and harder than anyone expects, with higher tax rates, irrational defense/industry/entitlement cuts and a crisis that will make Greece look like a quiet day in the park.

    • http://www.facebook.com/michelle.pastor.7 Michelle Pastor

      Romney would simply have delayed the inevitable. It should be painfully apparent that our government is as corrupt as any banana republic. We live under a media deception that rivals that of China, with exception of the internet. The Chinese kill unborn babies for being girls, we are no better, just different. Our society honors Peta for saving animals, and with the same passion considers killing any unborn human babies a noble “right”. Corruption and moral decay are partners that result in despotic governments. The real problem is the election results that gave us 168% registered voter turn out in some precincts, is exactly what happened in Venezuelan elections. The problem is once you go Marxist, you never go back. Chavez also received campaign funding from the Middle East. The ones in control of our country, are not who we think. Plan accordingly.

  • concernedcitizen20099

    World was heading for a rough economy no matter who was elected US President…

    More detailed analysis was needed in this article

  • http://www.facebook.com/michelle.pastor.7 Michelle Pastor

    Finally some news based on reality. The latest bombardments of glowing praise for China’s potential, after months of market losses, by the predictable MSM had me creeped out. They’re all singing from the same song sheet, text titles, and pictures. #Orwellian nation