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[quote=FRANKENSTEIN,276550]Exceprts from Business Week:

World Sneezes, China's Just Fine
Economists say a global slowdown will largely spare a mainland economy still based on domestic consumption and cushioned by vast cash reserves

By Frederik Balfour

Now comes the U.S. bear market and housing collapse. If you heap this looming U.S. recession onto the litany of China's other woes does it spell a recipe for a total China meltdown? Don't bet on it. In fact, analysts say that the question of decoupling—the notion that China is contagion free from a global slowdown—is actually a misnomer, since "historically, the Chinese economy has never been coupled," says Jonathan Anderson, Asian chief economist at UBS.

So questions of semantics aside, what's really going on? The answer is that while China is widely viewed as an export powerhouse, selling everything from garden gnomes to laptop computers overseas, most of its economic growth is still fueled by domestic investment and consumption, neither of which has shown much sign of slowdown so far. Anderson reckons that China's gross domestic product growth will slow to 10% this year, down from 11.4% in 2007, hardly the kind of slump to cause serious concern for Beijing.

A More Open Economy
Still, the Chinese economy is far more open than it was during the last U.S. recession of 2001. Back then, exports accounted for just 8.4% of gross domestic product and today it's about 40%. The European Union is China's biggest export market, with 20%, just ahead of the U.S. with 19%, while Japan and the rest of Asia take 25%, says Michael Spencer, Asia chief economist at Deutsche Bank. He's estimating growth will slow to 9.5% this year, but only half of that decline will be due to a slower increase in the growth of China's trade surplus. The reason the linkages from the trade sector to the rest of the economy aren't greater stems from the fact that domestic content only accounts for 25% of exports. Another is that although the export sector accounts for 80 million jobs, the sector most likely to get badly hurt is light manufacturing, which accounts for about 6.5% of total employment in China, while the export sector as 
a whole accounts for just 5% of total investment, says Anderson.[/quote]

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