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William Pesek

Asia Isn't Ready for a China Crash

Even if China manages a soft landing, its neighbors need to prepare better for an era of slower growth.
China's hunger for iron ore is plummeting.

China's hunger for iron ore is plummeting.

Photographer: Qilai Shen/Bloomberg

As China's first full year of rebalancing draws to close, how has President Xi Jinping done? Reasonably well, it seems. Growth appears to be moderating gently, stocks continue to soar and most economists still foresee a soft landing rather than market-shaking meltdown for the world’s second-largest economy.

Next year, however, Xi's team will have to get to the hard stuff: taming an opaque, unwieldy financial system. My question isn’t so much whether China will or won’t crash. It’s whether the rest of Asia is ready for the possibility of 5 percent or even 4 percent Chinese growth, as predicted by pundits like Larry Summers and Marc Faber. It’s almost certainly not.