Chinese chamber of commerce and industry. Erwin Soo/Flickr. Some rights reserved.Several leading mainstream economic institutions are warning of the risk of the coming global economic crisis. On 8 September, the Citi Group published a research report, “Is China Leading the World into Recession?”, written by Willem Buiter, Citi’s chief economist. The report warns that “a global recession starting in 2016, led by China is now our Global Economics team’s main scenario. Uncertainty remains, but the likelihood of a timely and effective policy response seems to be diminishing.”
On 11 September, Daiwa Securities Group, Japan’s second largest brokerage, published a report entitled “What Will Happen If China’s Economic Bubble Bursts?”. The Daiwa report argues that China’s economic growth rate will fall towards zero even under the “optimum scenario.” However, a “meltdown” of the Chinese economy is said to be the “most likely outcome.” In that event, “if China’s economy, the second largest in the world, twice the size of Japan’s, were to lapse into a meltdown situation such as this one, the effect would more than likely send the world economy into a tailspin. Its impact could be the worst the world has ever seen.”
Then on 3 October, Lawrence Summers, the former US Secretary of the Treasury and economic adviser to President Obama, published his essay, “The Global Economy Is in Serious Danger”, in the Washington Post.
