The epicentre of the economic earthquake might lie in the US, but its echoes are being felt around the world.
There are worries that the crisis could hit China. Until now that country has been spared the economic chaos, in part due to its protectionist economic policies.
But Indian ore exporters this week warned that demand from Chinese steel mills had fallen by 5 percent in the last month and buyers were defaulting on contracts.
This is due to declining demand for Chinese goods.
China’s economy is heavily reliant on selling consumer goods to the US. Chinese prime minister Wen Jiabo said, “A shrinking US demand would certainly have an impact on China’s exports. US finance is closely connected with Chinese finance.
“If anything goes wrong with the US financial sector, we would be anxious about the security of Chinese capital.”
Japan has also announced that exports to the US had dropped 22 percent in a month.
The sharp fall – in trucks and cars in particular – was accompanied by a decline in Japan’s sales to Europe and a rise in import costs due to record oil prices. These factors have pushed the country’s trade balance into the red.
There were signs earlier this week that the panic in the markets is leaking out to trading centres in Asia.
On Monday there were falls in Hong Kong’s Hang Seng stock market index, Japan’s Nikkei and South Korea’s Kospi.