China-Brazil link is top threat to global economy

Gene Frieda – Financial Times, 10/19/2015

No longer the source of awe that it once was, Chinzila — the nexus between China and Brazil — has become the number one threat to the global economy.

The spillover from weakening Chinese industrial growth to commodity prices and volume demand has turned financial stress fractures into major faultlines within the emerging markets. Without careful management and co-ordination, it is possible that these faultlines become systemic, with the Chinese renminbi the potential catalyst.

While it has been clear since 2012 that China’s growth model was running out of road, the stock market bust and bungled currency depreciation brought the further realisation that policymakers overestimated their control over the economy.

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