Signs that powerhouse China is slowing have spooked global markets and sharpened fears that the world economy will not escape another recession, AP reported. The dramatic stock market fallout from one small, preliminary survey of Chinese manufacturers far exceeded the data's importance, analysts said Friday. The world's No. 2 economy is slowing, as expected, but growth will remain relatively strong, they say. If nothing else, the market rout that began Thursday and continued Friday reflects China's growing importance for world growth, said Xianfang Ren, chief China economist for IHS Global Insight. A preliminary reading of HSBC's index of manufacturing for September, released about a week before the final survey is due, was at a two-month low of 49.4 and like August's reading of 49.9 is under 50 - indicating that activity is contracting. An official manufacturing index that surveys a bigger number of companies is also due about the end of September. The HSBC survey and weak indicators from other major economies prompted panicked selling by global investors afraid that governments hamstrung by debt crises, inflation and unemployment may be unable to avert a recession. But the HSBC survey is only a monthly snapshot, ill-suited to indicate long-term trends, said Ren. It also is heavily weighted toward exporters, who are bound to be feeling cautious given the current global outlook but is not a reliable measure of the broader economy, said CLSA analyst Andy Rothman. As one of the few big economies that is expanding at a rapid clip, China's role in powering world growth is significant. That's especially so for nations such as Australia that are heavily dependent on China's voracious demand for the minerals they export and for export reliant economies in Asia including Singapore, Taiwan and Japan. The Conference Board forecasts China to account for about a third of the increase in global GDP this year. -- SPA
