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With Japan and China faltering, Asia offers little economic relief

A woman looks at recruitment information posted on a board at Tokyo Metropolitan Government Labor Consultation Center in Tokyo in this April 8, 2010 file photo.

© Yuriko Nakao / Reuters/REUTERS

Don't look for Asia to dig the rest of the world out of its economic funk.

Heavily indebted Japan has become the latest major economy to fall back into recession.

And fresh data is casting doubt on the strength of a recent Chinese rebound.

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Official government figures released Monday show that Japanese gross domestic product shrank 3.5 per cent in the third quarter and a revised 0.1 per cent in the second quarter.

Two consecutive quarters of negative GDP is the conventional recession test, although most economists typically watch a much broader set of measures.

In China, the picture is more nuanced, but equally troubling. The Chinese economy continues to grow, but the country's all-important export machine sputtered in November because much of the rest of the world is buying a lot less of what it makes, most notably the Europeans.

The main driver of China's economy is infrastructure investment at home, not exports, points out Mark Williams, chief Asia economist at London-based Capital Economics.

"This is a concern," he explained in a research note.

"Trade data have added to our doubts about the sustainability of the China's rebound."

Export increased 2.9 per cent last month, versus 11.6 per cent in October. Exports to Europe fell 7 per cent in November. They are now down 18 per cent so far this year compared to 2011.

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Imports are also stalling. There was no import growth in November versus a 2.4 per cent increase in October.

Still, a Chinese slowdown looks a lot like what most other countries would consider a boom. China's GDP is expected to Grow 7.5 per cent this year, according to the state-run China Securities Journal. That's down from growth of 9.2 per cent in 2011 and 10 per cent in 2010.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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