China's Economic Slump May Yet Wash Up On Foreign Shores

Gloom from the worlds second largest economy could affect us all

- DANIEL MOSS

In the later years of the epic US growth stretch that ended with covid, a phrase caught on to describe buoyant conditions across the globe. The world was said to be on the cusp of a synchronized expansion. Few people still spoke of a 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.