Even though the U.S. is gripped in what pundits are calling an “historic” presidential election, I couldn’t help but notice that oil prices sagged badly today after analysts predicted that there will be no growth in China’s oil consumption in 2009. What? Not too long ago, about the time the world was gathering in Beijing for the Olympics, China was poised to dominate the world stage for decades to come.
But now, only a few months later, China’s economic miracle has been put on pause. Credit Suisse cut its forecast for growth in China's oil demand next year to nearly zero from 4% on the back of lower economic growth forecasts.
"The latest set of economic data out of China suggests a much more severe economic slowdown is under way there. Hopes of even a slightly decoupled China in 2009 are fading fast," the investment bank said in a report.
Oil industry analysts had been convinced that the booming economies of India and China would pick up slacking demand if Western nations went into recession. That view has weakened in recent months, as the economic crisis in the U.S. spread across the globe.
But according to Chinese officials, their country’s economy remains in good shape and it will maintain stable and relatively fast growth,
"The fundamentals of China's economy remain unchanged despite the changing world economic environment," said National Bureau of Statistics (NBS) chief Ma Jiantang. "We should be confident about the country's economic outlook."
China’s consumer price index (CPI) eased to 4.6% in September from the same period last year. It hit a 12-year high of 8.7% in February. Meanwhile, the country's gross domestic product (GDP) grew 9.9% in the first three quarters, 2.3% down from the same period last year. Officials blamed the slowdown on the combined effects of the global financial crisis, the world economic downturn and severe domestic natural disasters.
"More worrisome there are now increasing signs that the other main engine of the global economy – China - is also stalling."
With sophisticated banking systems in the U.S. and Western Europe unable to handle their own economic woes, I doubt that China has a system in place to successfully deal with a global recession. Will the country enter an extended period of malaise like Japan post 1989? Probably not, but for the time being, don’t expect an economic miracle to be coming out of Asia. And that’s not music to anyone’s ears these days.