Mohamed El-Erian detailed what he saw as the four most pressing issues affecting the global economy in an interview Tuesday with Bloomberg TV. Surprisingly, China was listed fourth, raising natural curiosities about what the other three might be.
The so-called fiscal cliff, whereby automatic tax increases and spending cuts are slated to take effect in the United States in January, took the top spot, according to El-Erian, the CEO of PIMCO. This was followed by the ongoing travails in Europe, geopolitical risk in the Middle East and elsewhere, and then the aforementioned China economic situation.
Two things are happening in China, he said, “one external and one internal.” One is that China is mainly a “selling machine for the rest of the world. As Europe slows and the United States remains sluggish, China is also slowing. Internally, China is going through a middle-income transition, and growth slows down in that phase of a country’s development.
“It’s something everyone should be looking at, because it is a risk to the global economy,” he concluded.