Slowing China economy likely to pinch US, too

May 7, 2014 

After watching China narrow the U.S. lead as the world’s largest economy, Americans might be tempted to cheer signs that the Chinese economy might be stumbling. But that would be short-sighted.

In an interconnected global economy, bad news for one economic superpower is typically bad news for another — even a fierce rival. An economist at Moody’s Analytics estimates that each 1 percentage point drop in China’s economic growth causes as much damage to the U.S. economy as a $20-a-barrel increase in oil prices: It shaves 0.2 percentage point off annual U.S. growth. A sharp slowdown in China also threatens the 28-member European Union, which outweighs even the United States if measured as a single economy.

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