During the second quarter, the GDP of Hong Kong was up 4.2%. Analysts had forecast that number at 5.3%. While the "colony" is somewhat walled of from the mainland, the economies of the two are co-mingled to a great extent. What happens in Hong Kong does not stay in Hong Kong.
The news is not sparkling for the Chinese economy has a whole.
Four of the five largest economies in the world are now either in a deepening recession or are getting there. As The Wall Street Journal points out, "The global economy — which had long remained resilient despite U.S. weakness — is now slowing significantly." There is a notion, mostly spread by buffoons, that China can manage to dodge a slowdown. It has enough consumer consumption activity in country to keep GDP moving up at rates near 10%.
China can’t stay out of the maelstrom. The crippled economies of the West and Japan will decrease imports to a crawl as consumers drown in gasoline and grain. Word from the U.S. Bureau of Economic Analysis is that people in the US spent more on gas than cars in June. That is bound to mean that the appetite for imports of all sorts will drop sharply.
China has had a good run, but even its stock market, which is down more than 50% in under a year, is sending a signal that what was once well is now ill.
The recession will catch up to China sooner than most expert predict.
Douglas A. McIntyre
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