Wandering China

An East/West pulse of China's fourth rise from down under.

Shanghai shipping slump as IMF warns China on euro slump [Telegraph]

An attempt to force China’s hand or affirmation of just how intertwined we all are?

The IMF warns China that it is vulnerable to the “clear and present danger emanating from Europe” which would see Chinese growth halve to roughly 4% if the crisis escalates.

For the actual report by the IMF (prepared by the IMF Resident Representative Office in the PRC, go here.

It states:

‘A storm emanating from Europe would hit China hard
* China’s growth rate would drop abruptly if the Euro area experiences a sharp recession
* But China has room for a countervailing fiscal response, and should use that space
* Unlike 2009–10, any stimulus should be executed through the budget rather than the banking

Further reading – do note that as of the morning of February 7th, China’s national broadsheets have not yet taken notice:

The IMF Issues A Chilling Warning About China’s Vulnerability To Europe (Business Insider, Feb 6, 2012)
Should such a tail risk of financial volatility emanating from Europe be realized, it would drag China’s growth lower. The channels of contagion would be felt mainly through trade, with knock-on effects to domestic demand.

China Risks 4-Point Growth-Rate Cut in Case of Europe Worsening: Economy (Bloomberg, Feb 6 2012)

China’s economic expansion would be cut almost in half if Europe’s debt crisis worsens, a scenario that would warrant “significant” fiscal stimulus from the nation’s government, the International Monetary Fund said.

– – –

Shanghai shipping slump as IMF warns China on euro slump
Shanghai shipping volumes contracted sharply in January as Europe’s debt crisis curbed demand for Asian goods, stoking fresh doubts about the strength of the Chinese economy.
By Ambrose Evans-Pritchard
Source – Telegraph, February 6, 2012

The shipping data came as the International Monetary Fund warned that China is vulnerable to the 'clear and present danger emanating from Europe'. Photo: ALAMY

The shipping specialist Lloyd’s List said container traffic through the Port of Shanghai – the world’s largest – fell by 100,000 boxes in January from a year earlier, or 4pc. Volumes fell by over one million tonnes.

The figures may have been distorted by China’s Lunar Year but there has been a relentless slide in the Shanghai transport data for months.

“China’s shipping markets face grievous challenges,” said the Shanghai International Shipping Institute. It acknowledged that the industry in the grip of downturn and likely to face a “worsening situation” in early 2012.

The biggest falls in container volumes have been on the Asia-Europe route.

The data came as the International Monetary Fund warned that China is vulnerable to the “clear and present danger emanating from Europe” and could see growth halve to roughly 4pc if the crisis escalates.


Filed under: Beijing Consensus, Chinese Model, Economics, European Union, Finance, Government & Policy, IMF, Influence, International Relations, Peaceful Development, Politics, Public Diplomacy, Soft Power, Strategy, Tao Guang Yang Hui (韬光养晦), Telegraph UK, Trade

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