China’s economic slump may yet wash up on foreign shores

livemint.com:

jobless recovery in America, and China appeared to be returning to its old robust self. Inflation was off the floor, seen as a good thing. Japan and the eurozone looked good.

The beauty of it was that it would lighten the burden of the US. Trade tensions between Washington and Beijing did not worry analysts much. Happy days beckoned.

But is the world now beset by a worrying bout of lopsidedness? The picture is dismal. China, a source of so much vitality the past few decades, just can’t catch a break. Reports this week revealed new blows to its wobbly recovery.

Exports swooned, imports dropped alarmingly and, after months of anaemic inflation, consumer prices actually fell in July, year-on-year. This deflation is expected to be temporary, given that its retail-price index still rose from the prior month and food prices are projected to pick up. That’s little comfort.

There’s a troubling lack of demand in the second-largest economy. There’s also an abundance of negativity. People are looking for signs of weakness in the Chinese economy, so chastening has been the experience of watching rosy predictions for the reopening fade fast.

Another data dump, another dour assessment. The property sector is a source of woe. Country Garden, once the biggest builder by sales, is teetering.

The solutions at hand seem modest and very familiar, such as doing a bit more on the fiscal front and paring interest rates. The central bank is pushing back against bearish bets on the yuan, but not strenuously. It would be a mistake to be apocalyptic about conditions in China.

Major economies go through cycles. We ought to get used to them in China. In the meantime, the globe is dependent on the US to keep growth ticking over.