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Article / 22 October 2014 at 16:10 GMT

#TradingDebates: China 'replicates' West's mistakes: panel

Former managing editor, TradingFloor.com / Saxo Bank
Denmark
  • Global financial crisis is a long way from conclusion
  • China repeating West's mistakes, panellist says
  • US unemployment reduction the outstanding positive

By Martin O'Rourke

China is replicating the mistakes of the West and heading towards its own crisis, a panellist at #TradingDebates said Wednesday.

"China's lesson from the Asia crisis of the 1990s was never to be beholden to the West for debt," Director at Fathom Consulting Danny Gabay said. "Our concern is China will mismanage what increasingly looks like a hard landing."

"China has effectively managed to replicate the mistakes of the West since the global financial crisis," said Gabay. "The Chinese will ultimately be defaulted upon."

Gabay's sombre prognosis for China chimed with the sentiment of the high-level panel that the recovery of the global economy has a long way to go yet.

"The crux of the problem is that we talk about the 20% constantly," Saxo Bank chief economist Steen Jakobsen said. "Monetary policy is conducted towards supporting them."

"Meanwhile the SMEs who generate real growth are simply being ignored. It's a pretend-and-extend scenario."

Societe Generale macro strategist Kit Juckes also warned of some tough times ahead. "We're getting deeper into a mess. We're addicted to cheap money and the addiction is getting stronger."

"There is a positive in that US unemployment is going down - but that's about it," he said.

Despite the gloom, shared by fellow panellist Martin Wolf in a keynote speech, Gabay did see some hope down the line.

"The final shoe of this crisis might be about to drop out," he said. "We are probably at the beginning of the end."

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 Is the gloss about to come off China's economic miracle? Photo: Thinkstock

Martin O'Rourke is managing editor of TradingFloor.com

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