Chinese economy imploding amid global depression: analyst
LONDON (AFP) - - The Chinese economy is in the process of imploding as the world slips towards what could be a "re-run of the Great Depression" of the 1930s, one analyst warned Thursday.
The deepening crisis could lead to regime change in Beijing and devaluation of the Chinese currency, with implications around the world," wrote Albert Edwards of Societe Generale in a weekly briefing note.
"While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere," he said.
"It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan.
"A subsequent trade war could see a re-run of the Great Depression," he added.
The comments come after China issued a stimulus package for its auto sector, including a tax cut, the first in a series of policies to boost key industries, according to state media.
China's economy grew by just nine percent in the third quarter of last year, the lowest level since mid-2003. This year, economic growth in China could slow to 7.5 percent, a level not seen since 1990, according to the World Bank.
The Chinese government unveiled a four-trillion-yuan (590-billion-dollar) spending programme in late 2008 to revive the economy. It was unclear if the auto package was part of this or a new item.
In the Societe Generale briefing note Edwards wrote: "The year 2008 has surely taught investors to think the unthinkable.
"In 2009 ... it is economic implosion in China and the global and geopolitical risk thereof" which could come as more of a shock, he said.
ph.news.yahoo.com |
