A Credit Suisse report considers the world economic picture and is concerned about China and its currency, voicing speculations that “Chinese authorities risk ‘losing control' of the economy.” The impact of China on the world economy, a hot topic particularly as global markets have crumbled year to date, could ultimately lead to “substantial implications across the investable universe.” In particular, this could impact a U.S. Federal Reserve interest rate hike under a worst case analysis.
The report starts off stating:
Our central scenario remains for a further controlled moderation in Chinese growth this year; however, we think that the risk of a more severe correction has grown substantially, as the effectiveness of the export/investment/credit- intensive growth model is...
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