The Risks of Relying on China
The massive Chinese export machine and whether the country's currency is properly valued have dominated international debate about China in recent months.
But here is something worth considering that could have an equally momentous effect on the global economy and financial markets at a vulnerable time: the prospect that China's economy will slow as signs build that it is overheating.
Consider: Commercial property under construction is likely to rise 26% this year from last year. Exports are expanding at clip of 30% a year. And electricity consumption is up an average of 15% for the past five quarters, nearly twice the pace of the 1990s, according to Morgan Stanley. Many view that as an unsustainable rate. Even the People's Bank of China, China's central bank, in late September embarked on a policy of increasing the cost of bank loans to tame what it feared was an overheating economy.
The big issue is that while many view China as simply an export story, the country also is an enormous importer of goods and services on which many, especially Asian, countries have become increasingly dependent. Through the first eight months of this year, exports to China accounted for more than 40% of the increase in total exports from Japan and South Korea. They also made up 37% of Australian and Taiwanese export growth and 31% of Hong Kong's.
Moreover, strategists at Merrill Lynch & Co. point out that for the first time, Japanese exports to China, Hong Kong and Taiwan -- what the firm calls "greater China" -- now exceed exports to the U.S.
So if the Chinese economy slows and it soaks up fewer exports from its neighbors and other major economies such as the U.S. and Europe, that could create ripples around the globe.
"As China slows, the Japanese economy could be in for yet another tough reality check," Morgan Stanley chief economist Stephen Roach recently wrote to clients. He also warned that "the rest of Asia will have to face the consequences of its new strain of dependency."
Even the U.S. is becoming increasingly dependent on China, not just for products Americans import, but for its own exports. U.S. exports to China are up 19% year-over-year through September, making China "by far the U.S.'s fastest growing export customer," according to Moody's Investors Service.
As for Europe, John Higgins, chief economist at Nomura International in London, notes that euro-zone exports to China are up 20% so far this year.
"China has the potential to massively destabilize the world economy, but in a very different way than most people think," says Michael Howell, head of CrossBorder Capital in London.
Not everyone, of course, sees a problem. In China, "you have 20 million people a year moving from the countryside to the city, which requires building a city the size of Philadelphia every month," says Mark Tinker, global head of debt and equity strategy at stockbrokers Execution Ltd. in London. He equates what is happening in China with the U.S. at the beginning of the 20th century.
But at least in the short term, a slowing China would come at a very vulnerable moment for the global economy. Residents of the world's second-biggest economy behind the U.S., the Japanese, aren't spending -- retail-sales growth is falling. Employment in Germany is sinking. And economic changes in both countries mean incomes will decline before they start growing. Meanwhile, doubts persist about how sustainable U.S. growth is, once the impact of mortgage refinancings and tax cuts fade and the American consumer becomes tapped out with indebtedness.
It could also be a wake-up call for international investors. If the central bank's tightening of lending terms causes companies to increase prices and spark inflation, bond markets could take a hit. That's because Chinese companies will try to pass on the additional cost of borrowing by raising prices.
And while investors have gone gaga over Asian emerging markets -- Morgan Stanley Capital International's Emerging Market Free Asia index is up 52% from its late-April lows -- a slowdown in China could pare those gains.
Other beneficiaries of a booming China -- and, thus, potential victims of a slowing one -- include commodities and companies that deal in raw materials, such as South Africa's Anglo American PLC, Australia's BHP Billiton Ltd. and Britain's Rio Tinto PLC and Johnson Matthey PLC.
依赖中国经济有风险
中国最近几个月成为国际论坛的焦点，主要议题有两个：庞大的出口机器和人民币汇率水平是否恰当。
鉴于当前脆弱的全球经济，有一个关于中国的问题值得考虑，这个问题将会对全球经济和金融市场产生同等重要的影响，那就是：中国经济可能将放缓，因经济过热的信号正不断增强。
看看以下数据： 摩根士丹利(Morgan Stanley)表示，中国今年在建商业房产可能较去年增长26%。出口以每年30%的速度扩张。电力消费在过去5个季度的平均增幅为15%，几乎是90年代增速的两倍。许多人认为上述增长速度难以维持。甚至中国人民银行(People's Bank of China)为控制可能发生的经济过热，在9月末公布了提高银行贷款成本的政策。
一个重要事实是，尽管许多人把中国看作是一个出口强国，但同时中国是一个商品和服务的进口大国，以亚洲为首的许多国家对中国的依赖性日渐增强。今年前8个月，日本和韩国出口增长额有40%贡献自中国。对中国出口额还占澳大利亚和台湾出口增长额的37%，占香港的31%。
不仅如此，美林(Merrill Lynch & Co.)策略师还首次指出，日本对大中华地区（中国、香港和台湾）的出口已经超过对美国的出口。
因此，如果中国经济放缓，对亚洲以及美、欧国家的进口减少，将导致全球经济产生波动。
摩根士丹利首席经济学家罗奇(Stephen Roach)向客户写道，“如果中国增长放缓，日本经济将再次陷入艰难处境。”他还警告，“亚洲各国将因对中国经济的依赖而品尝苦果。”
就连美国对中国的依赖性也越来越大，这不仅仅体现在对中国的进口上，也体现在对中国的出口上。据穆迪投资服务(Moody's Investors Service)称，今年前9个月，美国对中国出口额较上年同期增长了19%，使中国一跃成为“美国迄今增长最迅速的出口客户”。
至于欧洲，野村国际(Nomura International)驻伦敦的首席经济学家John Higgins指出，欧元区对中国的出口今年迄今为止增长了20%。
CrossBorder Capital驻伦敦的主管Michael Howell说，“中国存在著对世界经济造成强烈冲击的可能，但其方式可能将出乎绝大多数人的意料。”
当然，并不是所有人都意识到这个问题。股票经纪行Execution Ltd.驻伦敦债券与股票策略师全球主管Mark Tinker说，“中国每年有2,000万人从乡村进入城市，这意味著中国每月需要建造一个相当于费城规模的城市。”他认为中国的变化与美国20世纪初的情形相似。
但是至少在短期内，中国经济放缓将在全球经济仍非常脆弱之际来临。全球第二大经济体日本的居民谨慎控制支出－－该国零售增长放缓；德国就业状况恶化。这两个国家的经济状况意味著在其经济恢复增长前居民收入将下降。同时，人们依然担忧，一旦美国抵押再融资和减税效应减弱以及美国消费者迫于债务压力收紧支出，美国经济增长可能将中断。
这给国际投资者敲响了警钟。如果中国央行收紧贷款政策导致企业提高产品价格进而引发通货膨胀，债券市场可能将遭受重挫。因为中国公司将会通过提价把额外借贷成本转移给消费者。
尽管投资者狂热追捧亚洲新兴市场－－摩根士丹利资本国际亚洲新兴市场自由指数从4月末低点上涨了52%，中国经济放缓可能会令这一切化为乌有。
中国经济腾飞的其他受益者－－也是经济放缓的潜在受害者－－还包括商品以及从事原材料贸易的公司，比如南非的Anglo American PLC，澳大利亚的BHP Billiton Ltd.，英国的Rio Tinto PLC和Johnson Matthey PLC.。
