Finance news. My opinion.

State media say police have arrested four senior executives at a major state-owned shipping company for alleged mismanagement.

Online VnExpress says Duong Chi Dung, former chairman of Vietnam National Shipping Lines, or Vinalines, and three other executives were detained Friday for allegedly causing losses of $80 million from 2009-2010 after purchasing old ships and making poor investments.

Dung was promoted in February to head the government’s Maritime Department no fax pay day loan.

The arrests come more than a month after nine senior executives of another major state-owned company, the Vietnam Shipbuilding Industrial Group, or Vinashin, were given lengthy jail sentences following a scandal that resulted in the lowering of Vietnam’s credit rating.

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Investors are getting increasingly worried about whether Greece will remain in the eurozone. And they should.

There are a series of upcoming events that could spell the end of a deal, put in place nearly three months ago, to restructure Greece’s debt under strict terms dictated by the European Union, International Monetary Fund and European Central Bank, known as the troika.

"The threat from Greece remains real, and Greece exiting the euro area would likely have contagion effects that cannot easily be addressed in the current set-up," said Bank of America Merrill Lynch analysts in a note Monday. "The next weeks are crucial."

Greece has been struggling under a mountain of debt, as it tries to push through unpopular austerity measures and get its economy on solid footing. Without a cohesive government, that battle just got tougher.

Here’s what next in the Greek political drama, and what it could mean for the rest of Europe and the global economy.

Where do things stand after last week’s national elections? There is still no party that has been able to form a new government. The two parties from the previous ruling coalition that supported austerity and the debt deal, New Democracy and Pasok, only have 149 seats between them and 151 are needed.

So far, none of the other parties are willing to join them, given Greek voters’ anger over the harsh austerity measures.

If Greek President Karolos Papoulias is not able to bring together a new ruling coalition by Thursday, he is expected to call for another round of voting, likely in mid-June.

What is likely to happen if new elections are held in June? Recent polls and various experts seem to agree that the Coalition of the Radical Left, also known as Syriza, would be the top vote getter in the next round. Syriza has gained solid support since finishing second in last week’s round of voting.

If it can form a majority coalition with other anti-austerity parties, that would leave Greece with a government opposed to the earlier deals made with the EU, IMF and ECB, which has to approve funds for Greece that would allow the government to pay its bills and make its bond payments.

Whether the June election result would lead to a disorderly default and a Greek exit from the euro is far less clear.

"Even Syriza is not really interested in getting out of the euro. Their primary focus is to renegotiate the bailout package," said Dimitri Papadimitriou, economics professor and expert on Greece from Bard College.

But without financial support from the so-called troika, it will be tough for Greece to meet its financial obligations.

Can Greece stop paying its bills and still stay in the eurozone? That is the biggest unknown, and probably the biggest worry for markets.

Elisabeth Afseth, fixed income analyst for Investec Bank in London, said if Greece stops paying its bills, that will mean the end of the funding it so desperately needs. If that happens, it won’t have much choice but to start issuing its own currency to pay its ongoing bills.

How Greece can stay in eurozone

But Papadimitriou said that other European leaders are also loath to have Greece exit the euro, due to the shock it might cause for the continent’s already-fragile financial system 100% free credit score. Therefore, he said, it is possible, albeit unlikely, that there could be yet another new deal even if Greece stops paying what it owes.

"I would expect the European finance ministers’ meeting to have intense discussions this week," he said. "The best case for keeping Greece within the euro would be for the rest of Europe to be proactive in trying to come up with a renegotiated deal suitable for all parties. But I’m not optimistic."

What’s the best case scenario for Greece leaving the euro? In the best case, the ECB steps in and contains the so-called contagion effect.

While the central bank’s drumbeat has been to not be the lender of last resort, it has also made it clear that it would do everything in its power to keep the crisis from spreading.

Greek euro exit won’t mean tragedy

A dozen European countries are already in recession but thanks to Germany’s surprise growht, the entire EU and eurozone managed to stave off recession in the first quarter.

Even in this best case scenario, one in which measures to prop up the non-Greek sovereign debt work, the austerity measures needed to pay for them would send the remaining countries of the eurozone and EU into an even deeper, more prolonged downturn.

Yields could soar on government debt for Portugal and Ireland, let alone much larger economies like Spain and Italy, vastly increasing the costs for the remaining European governments that are paying for various bailouts.

That would also weigh on the already slowing growth in both the United States and Asia.

How bad could things get? Things could be worse than that — far worse.

"I don’t think anyone at the present time can quantify the contagion effect of a disorderly exit of Greece from the eurozone," said Papadimitriou. "No one can predict the markets. They have a mind of their own.

In a worst-case scenario, the Greek exit prompts other countries to leave the euro, as voters there follow Greek voters’ lead and rebel against austerity measures.

"As it stands now, there’s no precedence for leaving," said Afseth. "If Greece leaves, all of sudden there is precedent."

If larger countries follow Greece out of eurozone, it could cause a meltdown in the European banking sector, which holds billions of euros of sovereign debt of the other troubled economies, as well as private sector loans to consumers.

In turn, businesses in those countries would be unable to pay given their suddenly devalued currency.

While U.S. authorities have said U.S. banks have relatively limited exposure to European sovereign debt, the major banks here do have exposure to the European banking system, so a meltdown in European markets would be felt in the United States and around the globe. 

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Asian shares edged higher Monday due to optimism about the regional economy after a move by China’s central bank over the weekend to encourage lending and curtail a slowdown.

Japan’s Nikkei 225 index gained 0.2 percent to 8,974.69 and Australia’s S&P/ASX 200 added 0.2 percent to 4,292.70. Benchmarks in Singapore and New Zealand also rose.

But South Korea’s Kospi fell 0.6 percent at 1,906.60 and Hong Kong’s Hang Seng Index slipped 0.1 percent at 19,942.64.

The People’s Bank of China announced the bank reserve ratio requirement is being reduced a half percentage point as of next Friday.

The move brings the rate down to 20 percent for most major banks and effectively frees up billions of dollars for lending.

But the regional market remains nervous about political uncertainty in crisis-struck Greece.

Wall Street ended last week with a decline after JPMorgan said it lost $2 billion on poorly-thought-out trades. The Dow Jones industrial average fell 0.3 percent Friday to 12,820.60.

In currencies, the euro dipped slightly at $1.2890 while the dollar was little changed at 80.08 Japanese yen.

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South Sudan’s president said its northern neighbor has “declared war” on the world’s newest nation, just hours after Sudanese jets dropped eight bombs on his country.

President Salva Kiir’s comments, made Tuesday during a trip to China, signal a rise in rhetoric between the rival nations, who spent decades at war with each other. Neither side has officially declared war.

Sudan and South Sudan have been drawing closer to a full-scale war in recent weeks over the unresolved issues of oil revenues and their disputed border. The violence has drawn alarm and condemnation from the international community, including from U.S. President Barack Obama.

South Sudan won independence from Sudan last year as part of a 2005 peace treaty that ended decades of war that killed 2 million people.

The U.N. Security Council was briefed on the situation late Tuesday and members demanded “an immediate halt to aerial bombardments by the Sudanese armed forces and urged an immediate cease-fire and return to the negotiating table,” Susan Rice, the U.S. ambassador to the United Nations and the current council president, told reporters at U.N. headquarters in New York.

Sudanese President Omar al-Bashir gave a fiery speech last week in which he said there will be no negotiations with the “poisonous insects” who are challenging Sudan’s claim to disputed territory near the border.

Kiir, the southern president, arrived in China late Monday for a five-day visit to lobby for economic and diplomatic support. China’s energy needs make it deeply vested in the future of the two Sudans. Beijing is uniquely positioned to exert influence in the conflict, given its deep trade ties to the resource-rich south and decades-long diplomatic ties with Sudan’s government in the north.

Kiir told Chinese President Hu Jintao the visit comes at a “a very critical moment for the Republic of South Sudan because our neighbor in Khartoum has declared war on the Republic of South Sudan.”

South Sudan’s military spokesman Col. Philip Aguer said that Sudanese Antonov warplanes dropped eight bombs overnight in Panakuac, where he said there was ground fighting on Monday. Aguer said he did not know how many people were killed in the attack because of poor communication links with the remote area.

On Monday, Sudanese warplanes bombed a market and an oil field in South Sudan, killing at least two people, after Sudanese ground forces reportedly crossed into South Sudan with tanks and artillery.

The U.N. Mission in South Sudan confirmed that at least 16 civilians in South Sudan were killed and 34 injured in bombings by Sudanese aircraft in Unity State, ambassador Rice told reporters. She said the mission reported that the bombings also caused significant damage to infrastructure.

Talks over oil revenue and the border issues broke down this month after violence flared. South Sudan invaded the oil-rich border town of Heglig, which Sudan claims it controls.

Following international pressure, South Sudan announced that it withdrew all its soldiers from Heglig payday loans. Sudan claimed its troops forced them out.

Rice said the Security Council welcomed the withdrawal of South Sudan’s forces from Heglig. She said many of the 15 council nations expressed concern about reports of extensive damage to oil infrastructure in Heglig.

Al-Bashir, the Sudanese president, has vowed to press ahead with his military campaign until all southern troops or affiliated forces are chased out of territory Sudan claims.

He also said he would never allow South Sudanese oil to pass through Sudan “even if they give us half the proceeds.”

Landlocked South Sudan stopped pumping oil through Sudan in January, accusing the government in Khartoum of stealing hundreds of millions of dollars of oil revenue. Sudan responded by bombing the South’s oil fields.

In Khartoum, the pro-government Sudanese Media Center said that two of Sudan’s Darfur states began implementing a ban on shipping to South Sudan. The ban was imposed by Sudan’s parliament.

Officials in the Darfur states said they warned merchants that “stern measures will be taken against any person found to be smuggling food supplies and other commodities into South Sudan,” the SMC reported.

Sudanese officials said the measures were imposed in response to the invasion of Heglig.

South Sudan government spokesman Barnaba Marial Benjamin said earlier this month that Chinese and American investors want to build oil refineries in the South in the next six to seven months.

Benjamin said the refineries will help South Sudan process fuel for local consumption. South Sudan will also build a pipeline to the Kenyan coast and another to Djibouti through Ethiopia to be able to export its oil, he said. He said both projects were meant to make South Sudan independent of Sudan’s fuel infrastructure and processing plants.

Kiir on Tuesday told Hu that he came to China because of the “great relationship” South Sudan has with China, calling it one of his country’s “economic and strategic partners.”

Both sides have tried to win Beijing’s favor, but China has been careful to cultivate ties with each. Like others in the international community, China has repeatedly urged the two sides to return to negotiations.

The White House repeated its earlier condemnation of the Sudanese incursion and called for both sides to stop fighting and hold peace talks.

“Sudan must immediately halt the aerial and artillery bombardment against South Sudan by the Sudan armed forces,” White House press secretary Jay Carney said Tuesday to reporters traveling with Obama to North Carolina. “Both governments must agree to an immediate unconditional cessation of hostilities and recommit to negotiations,”

He repeated Obama’s warning to both sides that “there is no military solution” to their differences.

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Alean Elston just cannot find a job.

The 26-year-old from New Jersey has tried nearly everything. She has mailed resumes, asked friends and family for leads and dropped in on retail outlets in hopes of finding work.

Applying for job after job with no luck is nothing new for the 2009 business administration graduate. And as a consequence, she lives at home with her parents. Fact is, she cannot afford a place of her own.

Elston is far from alone.

Younger workers were disproportionately affected by the recession. As a group, they had a very tough time finding work, and many highly educated graduates were forced to take menial jobs or retreat to the safety of academia.

The lack of good jobs means that young people are stuck at home — a common occurrence during tough times. While not ideal, families face no easy alternatives.

"The fact is, most young people are not so fortunate that their parents can purchase them a condominium or house just for fun," said Anthony Sanders, a senior scholar at the Mercatus Center.

In econospeak, the process of a young person finding accommodations of their own is called "household formation" — and that stalled big-time during the recession.

The trend toward staying home for longer means the economy is denied dollars that, under different circumstances, young people would have been eager to spend.

There is no student loan ‘crisis’

Beyond rent or mortgage payments, new living arrangements often require investments in furniture, flatware, appliances, plants for the yard and insurance policies. Even new car sales can be affected.

And reduced household formation can contribute to a lack of demand in the housing market. That trend was especially troublesome during the last recession, as foreclosures spiked and already high inventory levels jumped off the charts.

"We ended up with far too many [housing] units and the bubble popped with a violence that shook the entire economy," Warren Buffett wrote in his 2011 letter to Berkshire Hathaway () shareholders.

The excess inventory meant a sharp reduction in homebuilding and jobs in the construction industry.

The number of new housing starts fell from a peak annual rate of more than 2 million in some months of 2006 to a recession low of only 478,000 starts in April 2009.

Even after the recession was declared officially over, companies weren’t hiring young people. Young people weren’t moving out and soaking up excess housing inventory. And new homes weren’t being built, acting as a significant albatross around the economy’s neck.

This negative feedback loop has proven quite difficult to break.

But now, Buffett and others believe the trend might be reversing.

"The devastating supply/demand equation is now reversed," Buffett wrote to Berkshire investors in February. "Every day we are creating more households than housing units."

"People may postpone hitching up during uncertain times, but eventually hormones take over," he said. "Living with the in-laws can quickly lose its allure."

The numbers back Buffett’s hypothesis. Household formations rebounded last year, and are now closer to historical averages. And new home starts picked up steam in the final months of 2011 — momentum that has carried over into this year.

Buffett’s musings on hormones aside, there is another explanation for the uptick in household formation: More jobs.

Over the past two years, the employment population ratio, which measures the proportion of population that works, has improved more rapidly for young people than other demographic groups.

That ratio has increased almost 2 percentage points for individuals aged 20 - 24, while older workers have seen their numbers improve by only half a point.

Add that to a string of solid monthly jobs reports, and things are looking up.

White House: Jobs recovery isn’t ’statistical fluke’

Sanders agrees with Buffett in principle, but cautions against popping the champagne just yet. "The job market is still so bad," Sanders said. "Especially for college and high school grads who are not in high demand areas."

"We are seeing more and more recruiters showing up to campuses," Sanders said. "But the recruiters are coming with very specific ideas of who they want to hire."

Greg Kaplan, an economist at the University of Pennsylvania, said that there is no guarantee that more young people will move out on their own as the economy and job market improve.

"It’s possible that we look like Italy now, where housing costs are just so high that people are going to live with their parents for a longer period of time," Kaplan said.

Elston, for one, can’t wait to move out — if only that job would arrive. She said she applies for at least two positions a day, and has been working odd jobs to help her parents pay the bills.

"It just feels like an endless cycle," she said. "It seems like I’m the perfect candidate for some of these jobs, so why not me? Why not?"  

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China says its trade rebounded in February after a Lunar New Year slowdown but a broader measure gave clear signs both global and Chinese demand are weakening.

Customs data Saturday showed exports grew 18.4 percent over a year earlier, up from January’s 0.5 percent contraction. Imports jumped 39.6 percent, up from the previous month’s decline of 15 percent.

China’s exporters have been hurt by weakening global demand amid Europe’s debt crisis and U.S. economic troubles. Imports have been supported by relatively strong Chinese economic growth but that also is easing.

Combined data for January and February showed export growth fell to 6.9 percent over the same two-month period last year, well below December’s 13.4 percent. Imports for the two-month period rose 7.7 percent, down from December’s 11.8 percent.

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South Korean inflation may accelerate above the government

Stocks slumped Wednesday in one of their worst showings this year as Greece, slogging through negotiations with other countries over a bailout, once again cast a long shadow over the financial markets.

The Dow Jones industrial average dropped 97.33 points to close at 12,780.95. It was the worst one-day decline for the Dow this year, and the index narrowly avoided its first triple-digit loss for the year. The average was down as much as 125 points.

The Standard & Poor’s 500 and the Nasdaq composite index climbed tentatively through the morning but gave up their gains by afternoon. The S&P fell 7.27 points to 1,343.23. The Nasdaq fell 16 points to 2,915.83.

The declines were broad, with nine of the 10 industry groups in the S&P recording losses. The only group that didn’t was materials, which was flat. Only five of the 30 stocks in the Dow rose for the day, and just barely.

In a 3 1/2-hour conference call with the finance ministers of the other 16 countries that use the euro, Greece offered assurances that it had found euro325 million in budget cuts in addition to harsh measures that it has already promised.

But in a sign of the distrust that has built during the European debt crisis, particularly among richer countries, a European official said Greece would need tighter oversight of its budget before it receives another bailout.

Greece needs the money before a big bond payment comes due March 20. A default would rattle the world financial system. For weeks, incremental movement in the Greek crisis has whipsawed U.S. stocks.

“Long story short, we long for the days when markets traded on fundamentals,” said David Katz, principal at WeiserMazars Wealth Advisors. He thinks stock picks have been ruled by emotion, rather than clear-eyed examinations of companies’ balance sheets, at least since the credit crunch in 2007 and the ensuing Great Recession.

“Just as quickly as you see the market pop up from one headline, then you see the downturn from another,” Katz said. “It doesn’t really have to be (big news). It’s not even the meat of the story, it’s the headline.”

Greece makes up just 2 percent of the total economic output of the 17 countries that use the euro. But investors are troubled by the fallout from a potential default and similar financial problems festering in other European countries, like Portugal, Italy and Spain.

“There is no shortage of people who would argue that Greece is a non-event,” said Dan McMahon, director of equity trading at Raymond James. “It’s more that it’s a barometer for the rest of the eurozone.”

Stocks have risen steadily all year, so some analysts argued that a slowdown was inevitable. The S&P 500 ended 2011 at 1,258, and many analysts predicted it would end 2012 at 1,350. But it had already reached that level last week.

“When the market does in a few weeks what was expected for the year, it’s natural for the market to sort of pause and pinch itself and say, `Is this supposed to go on?’” said Brian Gendreau, market strategist for Cetera Financial Group.

“If it continued at the same pace for the rest of the year, that’s just unrealistic. You’d need an unrelenting drumbeat of good news, and we haven’t gotten that,” Gendreau said.

The price of oil climbed to its highest level in five weeks after Iran said it would cut off some exports of crude to Europe. Iran was responding to the European Union’s plans to embargo Iranian oil this summer, an attempt to pressure Iran to abandon its nuclear program. Benchmark U.S. crude rose $1.06 to end the day at $101.80 per barrel in New York.

The average retail price for a gallon of gas was $3.52. Gas prices are already the highest on record for this time of year, and economists fear that they could crimp the halting economic recovery. This time a year ago, gas was $3.12.

Apple stock went on a wild zigzag. It set an all-time high at midday, $526.29 per share, but fell sharply and closed down $11.79 at $497.67 after eight straight days of gains.

The decline appeared to be caused by rumors that the Nasdaq 100 index would adjust its components to give Apple, the biggest company in the world by market value, less weight. That would force mutual funds that track the Nasdaq 100 to sell Apple stock.

Those rumors may have been overblown. Nasdaq declined to comment on Apple but pointed out that it adjusts the index if a company’s market value represents more than 24 percent of the index. Apple represented about 17 percent at the end of the day Wednesday.

The euro fell slightly against the dollar to just under $1.31. The euro had been mostly rising since mid-January, but topped out around $1.33 late last week.

The yield on the U.S. government’s benchmark 10-year Treasury note fell to 1.93 percent from 1.94 percent. Yields fall and bond prices rise when investors decided to seek a haven for their money rather than take a bet on the stock market.

Among the biggest movers in the U.S. market:

_ Comcast, the cable provider, climbed 5 percent after beating Wall Street expectations for profit and revenue. It managed to slow the loss of customers as it added channels and better customer service.

_ Kellogg rose 5 percent after announcing it would buy Pringles from Procter & Gamble. Diamond Foods had a deal to buy Pringles but got caught up in an accounting scandal. P&G was flat, and Diamond was up 5 percent.

_ Zynga, the maker of popular Facebook games like FarmVille, plummeted 18 percent after reporting it lost money in the fourth quarter. Zynga went public in December.

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World stock markets fell Wednesday as Europe’s festering debt crisis overshadowed figures showing that Americans increased their retail spending for a fifth straight month.

Benchmark oil slipped below $99 per barrel while the dollar rose against the euro and was little changed against the yen.

European shares fell in early trading. Britain’s FTSE 100 slipped marginally to 5,517.44. Germany’s DAX shed 0.9 percent to 5,878.33 and France’s CAC-40 lost 0.4 percent to 3,036.76.

Wall Street also braced for a lower opening, with Dow Jones industrial futures falling 0.7 percent to 11,957 while S&P 500 futures lost 0.8 percent at 1,244.50.

The retreat in Europe followed losses in Asia, where Japan’s Nikkei 225 index lost 0.9 percent to close at 8,463.16, a six-week closing low. Hong Kong’s Hang Seng dropped 2 percent to 18,960.90 and South Korea’s Kospi shed 1.6 percent to 1,856.07. Benchmarks in Singapore, Taiwan, and Australia also fell.

Mainland China’s benchmark Shanghai Composite Index lost 2.5 percent to 2,466.96, its lowest closing this month. The smaller Shenzhen Composite Index dropped 2.6 percent to 1,059.24.

Data on retail sales showed Americans spending more on autos, electronics and building supplies in October _ and at a faster rate than expected. Many saw the result as a sign that the U.S. economy may well avoid another recession as consumer spending is the biggest component of the country’s GDP.

Still, investors could not get past the mammoth debt loads carried by Greece and Italy, which are threatening to trigger an all-out financial crisis on the continent.

“The world does not believe the crisis is solved,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong. “The market is still very jittery and still worried about possible effect of economic slowdown and recession in Europe. I think this will depress the market for a quite a long period.”

And the problem isn’t just isolated to Greece or Italy, he said.

“It’s the problem of the entire Western world,” Lun said. “For Europe, it overborrowed for 12 years and for the U.S., it probably overspent for 30 years _ so 30 years of mismanagement cannot be corrected in one day.”

On Tuesday, higher interest rates on government debt issued by Italy, Spain and other countries rattled European stock markets. The interest rate on Italy’s 10-year bond jumped back above 7 percent, a dangerously high level.

Higher borrowing costs _ in the form of extra yields that must be paid for bonds regarded as riskier _ are a sign that investors are worried that those countries may have trouble paying their debts.

The debt crisis among the 17 nations that use the euro currency “appears to be deteriorating by the day,” analysts at Credit Agricole CIB said in a report. “Contagion has spread across eurozone bond markets like wildfire and the lack of action to create a firewall means that that there is little to extinguish it.”

Italy’s borrowing rate first crossed the 7 percent threshold last week, raising worries about Rome’s ability to manage its debts. Greece, Ireland and Portugal had to get rescued by international lenders when their borrowing rates crossed the same level.

Meanwhile, Chinese property shares were sharply lower amid falling housing prices as government efforts to cool the overheated housing industry take effect. Hong Kong-listed blue chip China Overseas Land & Investment fell 4.6 percent, while Poly Real Estate Group lost 4.8 percent.

Japan’s Olympus Corp. soared 15.6 percent amid easing worries that the company _ embroiled in a scandal over the concealment of huge investment losses _ will be delisted by the Tokyo Stock Exchange.

Shares of Tiger Airways jumped 6.1 percent in Singapore trade after the carrier was cleared to increase its number of flights in Australia ahead of the busy Christmas travel period.

Mainland Chinese shares in real estate, cement, media and financial companies weakened following a report from the International Monetary Fund that warned China’s banks could face risks if real estate prices fall sharply or unpaid loans increase. The IMF also said other dangers could arise from growing imbalances in a Chinese economy that relies heavily on exports and investment to drive growth.

Shanghai-listed Ping An Insurance lost 4.6 percent while China Nonferrous Metal Industry lost 4.7 percent.

On Wall Street on Tuesday, the Dow rose 0.1 percent to 12,096.16. The S&P 500 gained 0.5 percent to 1,257.81, and the Nasdaq added 1.1 percent to 2,686.20.

Benchmark crude for December delivery was down 43 cents at $98.94 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.23 to settle at $99.37 in New York on Tuesday.

The euro fell to $1.3532 from $1.3543 late Tuesday in New York. The dollar fell to 76.94 yen from 77.04 yen.

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China’s high-flying economy is starting to lose altitude. The big question is whether the world’s economic superstar will descend gradually _ or so fast that it harms a fragile global economy.

China’s comedown is being engineered by its policymakers. They want to slow its growth rate just enough to cool inflation without sapping job growth.

It’s a delicate task.

“Nobody can say with any confidence” if they’ll succeed, says Barry Eichengreen, an economics professor at the University of California, Berkeley.

China’s explosive growth remains the envy of developed nations like the United States. It grew faster than any other major economy in the April-June quarter, according to The Associated Press’ latest quarterly Global Economy Tracker. Only Argentina’s much smaller economy matched China’s 9.5 percent annual growth rate.

By contrast, the U.S. economy grew at a 1.3 percent rate in the April-June quarter, before expanding 2.5 percent in the July-September period.

The AP’s Global Economy Tracker monitors economic and financial data in 30 countries representing more than 80 percent of global output.

Economists worry that China’s economy could suffer what they call a “hard landing.” A sudden plunge in China’s growth would harm the economies of the United States, Europe and small countries that need China to buy their coal, copper and other raw materials.

On Tuesday, a Chinese government group said manufacturing grew in October at the slowest pace in nearly three years, partly due to weak export orders. It forecast that the economy would slow further the rest of the year.

The threat from a slower-growing Chinese economy comes as the United States is still struggling to recover from the Great Recession of 2007-2009. And an agreement last week to ease Europe’s debt crisis might not prevent the continent from sliding back into a recession that would ripple through the United States and other countries.

When surveyed this year by the Society of Actuaries, corporate risk managers in the United States, Canada and elsewhere said a slowdown in China posed the greatest threat to their business.

A hard landing wouldn’t just squeeze U.S. and European exporters. It could also destabilize Chinese society. And it could escalate global trade tensions.

Hampered by inflation above 6 percent and slowing exports, China’s growth is expected to decelerate from 10.3 percent last year to 9.5 percent in 2011 and 9 percent in 2012, according to the International Monetary Fund. The IMF expects the global economy to grow 4 percent this year.

Developing countries emerged faster than other nations from the Great Recession. They’re now growing much faster than rich countries. According to the AP’s global tracker:

_The three fastest in the April-June quarter were China (a 9.5 percent annual growth rate), Argentina (9.5 percent) and Indonesia (6.5 percent).

_The laggards are from the industrialized world _ Japan (down 1.1 percent), Norway (up 0.3 percent) and Britain (up 0.6 percent).

_Growth is slowing worldwide. It weakened from a year earlier in 19 of 26 countries that reported April-June data.

China’s gaudy growth doesn’t mean much to Xie Jun, who runs a factory in the southern Chinese boomtown of Dongguan. He’s enduring a tough year.

His company makes and exports headphones, cell phones and computer accessories. It’s paying 30 percent to 50 percent more this year for chemicals, fuel and other raw materials. Labor costs have nearly doubled.

Xie’s customers are reducing orders, forcing him to lay off more than 10 percent of his staff at Dongguan Jincai Real Co. and leaving him with about 100 workers.

“I just feel hopeless,” Xie, 45, says. “It’s hard to say if it will get any better next year.”

China will likely account for nearly a third of global growth this year.

Exporting countries depend on China’s demand for raw materials and consumer goods. Mines in Australia and Chile supply coal, copper and iron ore. General Motors sells more vehicles in China than anywhere else, including the United States. China was the No. 3 destination for U.S. merchandise exports last year, behind Canada and Mexico.

China’s trading partners are watching warily to see whether it can avoid a hard landing. Economist Nouriel Roubini has defined a hard landing as a drop in annual growth to 5 percent or less. He says China must expand 8 percent a year just to keep enough people employed to “maintain its social and political stability cash advances pay day loan.”

Eswar Prasad, professor of global trade at Cornell University, puts the odds of a hard landing in China at 50-50.

Other analysts say they’re confident China’s policymakers will manage to reduce inflation gently without stifling growth too much.

The authorities “are well-aware of the risks,” says Bob Mark, who runs Black Diamond Risk Enterprises and has advised Chinese banks. “It’s not like they’re going to be blindsided.”

China’s central bank has raised interest rates five times since mid-2010 to try to shrink inflation. Even so, consumer prices jumped 6.2 percent from August 2010 to August 2011. That was fifth-fastest among the 30 countries in the AP’s global tracker. In the United States, by contrast, prices rose 3.8 percent in the 12 months ending in August.

News that China’s growth dipped to 9.1 percent in the July-September quarter from 9.5 in the April-June period was met with relief by some economists. Rajat Nag, managing director of the Asian Development Bank, says it suggests a soft landing ahead.

Eichengreen notes that Beijing’s communist authorities “have lots of levers they can pull, unlike U.S. authorities.”

Senior bureaucrats in effect run the economy. The government owns most of the biggest companies and banks. It controls the currency.

Officials can, for example, suppress the value of China’s currency, the yuan. A lower yuan makes Chinese goods cheaper overseas. The United States has long accused China of keeping its currency artificially low to give its exporters an unfair edge.

Chinese policymakers can also order state-owned banks to lend if the economy slows much. They can command local governments to keep workers busy building roads and bridges.

Roubini, a New York University economist who runs a research firm, thinks China’s authorities will use all those tools to keep the economy growing briskly through 2012. They’ll want to ensure a smooth transition next year, when a new president and premier will come to power.

But Roubini and others worry that the outlook after that is bleaker. He thinks China’s growth could sink to 5 percent or less in 2013 or 2014.

At the heart of the problem is how China has stoked its expansion. It hasn’t encouraged its consumers to drive the economy with their spending, as Americans do. Instead, it’s juiced growth by pushing exports and investing in factories, roads, railways and real estate.

Such investments account for about half of China’s gross domestic product, a broad gauge of economic activity. That is a wildly lopsided share that suggests China is investing in far more construction than it needs.

In most major countries, consumer spending, not investment, drives the economy. Last year, for example, consumers accounted for more than 70 percent of GDP in the United States, 63 percent in Britain, 58 percent in Germany and 57 percent in Japan. In China, consumer spending represented just 39 percent of GDP.

Behind China’s investment boom are bank loans that might never be repaid, because the projects aren’t expected to throw off enough revenue.

Roubini’s research firm estimates that China has wasted $1.4 trillion since 2008 on investments that will likely end up as bad debts.

Optimists say China is merely planning for the future. A growing middle class will eventually occupy the new houses, ride the new trains, fly from the new airports and drive new cars on the new highways. The new factories will make goods to meet rising demand at home and abroad.

But demographics pose another problem. China is aging fast. Largely, that’s because of population control policies that limit most families to one child. This year, 8.9 percent of Chinese were 65 or older. By 2021, 12.9 percent will be.

“A significant slowdown is coming because their labor force is aging,” Eichengreen says. By 2015 or 2016, he says, China’s growth could slow to 5 percent or 6 percent.

Economists have urged China to rely more on its consumers and less on exports and dubious investments. In Dongguan, factory owner Xie would agree.

“I am thinking about focusing more on the domestic market next year,” he says. “At least we have 1.3 billion people. It is a big market.”

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