Is China ready for a US slump?

Its confidence may be high, but will the Chinese economy be able to stand a rise in US protectionism and a fall in demand for exports? Economist Stephen Roach reports on his latest Chinese visit.

Taking its cue from a powerful liquidity cycle and the frothy financial market conditions it has inspired, the world is not prepared for a meaningful shortfall of US economic growth. That's certainly the message I take away from my final stop of the year in China - whose seemingly Teflon-like economy would hardly be immune to a global accident made in America.

As 2006 draws to a close, the debate inside of China remains quite focused on its own internal challenges. At least, that's the tentative impression that emerges from the first two days of a three-day swing through Beijing. With visible signs of the boom literally everywhere you turn and an IPO-led stock market surging its way back toward the highs of early 2001, the mood remains as ebullient as ever. While the latest monthly data are flashing signs of a slowdown, you would never know that in meeting with key decision-makers in Beijing.

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