SocGen’s Edwards: China will collapse in 2012

A likely hard landing in China will bring the financial crisis of the past five years to a climax in 2012, a leading City strategist has warned.

Albert Edwards, head of strategy at Société Générale and a well-known market bear, said the next 12 months will be the “final year of pain and disappointment”, the Guardian reports.

Predicting a sharp slowdown in activity in the world’s fastest-growing emerging economy, Edwards said: “There is a likelihood of a China hard landing this year. It is hard to think 2013 and onwards will be any worse than this year if China hard-lands.”

Although China emerged rapidly from the downturn of 2008-2009, Edwards said the recovery was the result of huge reflationary stimulus by the Chinese government. Falling imports have led to a widening of China’s trade surplus, but exports are set to slow and a trade deficit is looming, he added.

Meanwhile, Edwards predicted the chance of a fresh recession in the US is “very high” despite a recent recent run of more upbeat economic news, according to the Guardian.

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the “stall speed” that has historically led to recession. Edwards sees little chance of a ‘muddle through’, he said.


This article was first published on Investment Week

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