Why this China shock will hit close to home

DURING the salad days of global supply chains, the benefits of being on cordial terms with China were barely questioned. Being in the same neighbourhood was considered better yet. It was a ticket to ever-greater prosperity.

That idea is now getting some welcome scrutiny. Asia’s years of runaway expansion are behind it, and being in China’s economic orbit is more of a mixed blessing. While that nation’s export juggernaut has encountered stiff resistance in the US, its factories are sending increasing volumes of cheap products to the rest of Asia. Consumers will find that attractive, but domestic manufacturers may come to loathe it – if they don’t already.

And while it is good that inflation has been contained, there is a risk that economies get too much of a good thing. Price gains are below target in many places, and a sustained move south from here would be detrimental.