Signs of China slowdown add to dim global outlook

Signs that the powerhouse Chinese economy is slowing have spooked global markets and sharpened fears that the world economy will not escape another recession, so much so that a small, preliminary survey of Chinese manufacturers contributed to a global stock market plunge this week.

However, analysts said Friday that the dramatic fallout from a preliminary reading of HSBC's index of manufacturing for September far exceeded the data's importance. And while the world's No. 2 economy is slowing as expected, they said, growth will remain relatively strong.

If nothing else, the market rout that began Thursday and continued Friday reflects how much the rest of the world is relying on China, one of the few big economies that is expanding at a rapid clip, to stave off recession.

HSBC's preliminary survey, released about a week before the final survey is due, showed a two-month low of 49.4. That followed an August reading of 49.9, and anything under 50 indicates that activity is contracting.

Coming alongside weak indicators from other major economies, the data prompted panicked selling by global investors afraid that governments hamstrung by debt crises, inflation and unemployment may be unable to avert a recession. more