Y STUART LEAVENWORTH
In speeches and writings, Chinese President Xi Jinping often delivers the rhetoric of a Communist Party hardliner. And yet more than ever, capitalists worldwide are depending upon this Leninist – one who is in the midst of a power struggle – to prop up the global economy.
Concerns about China contributed to Wall Street’s biggest one-day sell-off last week since 2011, and the slide could continue when markets reopen on Monday.
Friday’s rout was triggered by a report that China’s manufacturing output had dipped to its lowest point since the 2009 global economic crisis. Investors increasingly fear China’s slowdown could be a tipping point for many emerging economies, many of whom grew dependent on selling commodities to China during its go-go days.
The 531-point drop in the Dow on Friday wasn’t all about China, of course. Investors also are worried about inflated equity prices, dropping oil prices, and the possibility the U.S. Federal Reserve could soon approve an interest rate hike. But China’s economic troubles loom large.
“The market may have overreacted,” said Charles Morrison, an Asia-Pacific expert who heads the East West Center in Honolulu. “But the Chinese manufacturing slowdown is a data point that creates concerns worldwide, because China’s manufacturing sucks up so much of the world’s resources.”
By some measures, China’s economy has grown to be equal in size with that of the United States, and it is still growing at a rate of roughly 7 percent yearly. But that’s a slowdown from previous years, and the impact is huge on China’s trade partners.
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Russia’s economy is teetering as well….