China Growth May Slow at Worst Time for World Economy
For years economists have warned China needs to do more to keep its economic growth from spiraling out of control. Now, with the country’s leaders finally showing signs they may be able to rein in the beast, Bloomberg reports there’s a danger in that as well:
The risk is that, with months of effort to cool off China finally taking hold when the U.S. is already flirting with recession, both main engines driving the global economy may power down at the same time.
“As foreign demand deteriorates, China may overdo its tightening of policy and cause a sharp economic slowdown,” says Frank Gong, Hong Kong-based chief China economist at JPMorgan Chase & Co. “If the central bank raised interest rates too much, it would damp domestic demand and increase the danger of economic downturn.”