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China's economy is facing a serious downturn this year and the reverberations will be felt across the region and beyond, a new report has warned.

Growth of China's gross domestic product could fall beneath the 6% mark this year, according to the annual Global Risk Network assessment for 2009, published today (13 January) by the World Economic Forum.

It warned that the extent of the economic downturn in China would affect the depth of recessions felt in western economies, as well as in the Asia Pacific region.

The report said: "The decline in export demand has led to a substantial reduction in China's overall economic growth, increasing considerably the risk of a hard landing that would stress the financial system and could aggregate social tensions within China and beyond as other economies face similar decline." 

China's position as both a creditor to other nations, notably the US, and an importer of goods mean that a dramatic slowdown would have "global ramifications", according to Daniel Hofmann, chief economist with Zurich Financial Services Group, which helped to publish the report alongside Citigroup, Marsh & McLennan, Swiss Re and Wharton School Risk Center.

The report authors' bleak assessment of the global economy in 2009 was echoed in the UK today, by the British Chambers of Commerce.

"Disturbing", "frightening" and "exceptional" were the words it used to describe a survey of nearly 6,000 UK businesses in the fourth quarter of last year.

It said: "There are no positive features in the Q4 results. Domestic demand is plunging, exports are falling, and confidence is plummeting."

The group's comments add fuel to speculation that the UK government's original prediction of an economic recovery in the second half of 2009 will not be realised.


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