The great downhill bicycle ride

A little over a year ago, when it was already obvious to virtually everybody that the boom was over, the City’s Panglossian crowd came up with one last, seemingly profound, argument to allow them to continue to deny reality. Going by the ugly name of ‘decoupling’, the theory was that the emerging economies were no longer reliant on exports to the West. America and Europe could plunge into recession, the argument went, but Indian and especially Chinese consumers would take over, allowing their economies to shrug off the West’s downturn.

Like assumptions underpinning the boom years, this one has since been found wanting. With the British economy shrinking, much of Europe performing little better and America in a deep funk, demand for imported consumer goods is declining. With the global construction industry in crisis, demand for Chinese steel is also falling off a cliff. Japan, another of China’s top markets, is back in the doldrums.