Many economists believe that even though the US economy isn't in the midst of a recession today, it's already well on its way to one. The sticking point is, how long will that dip last? Optimists, citing the US economy's adaptibility, say it might only be a brief interlude between ages of prosperity. Meanwhile, pessimists envision an even more severe setback than when the dotcom bubble burst in the 90's.

If the pessimists are right, then the rest of the world will have to pay the price as well, as a slow-down in global economic growth will be inevitable. When the sub-prime mortgage crisis first erupted last year, Chinese economic observers thought that China, far away on the other side of the Pacific, would be safe. But this year, as the Chinese stock market tumbled in step with with global markets, such earlier prognoses seem to have been excessively sanguine.

We believe that in the context of globalization, Chinese should think in terms of being "on the same side" and not on "the other side" of these issues. Some economists describe the Chinese and Asian economies as being detached from the US. Asia today is less affected by the US economy than it has been before, and for this reason, they maintain that the Chinese economy will keep growing even if the US one declines.

Generally speaking, this judgment seems reasonable. Some analysts are saying that among the three driving forces behind the Chinese economy—investment, spending and exports—the first two are now more influential than the last, hinting that China is finally becoming less dependent on foreign demand for its growth.

But this doesn't mean that China is invulnerable. Chinese stocks plunged in the wake of the US stock market's own tanking last week, reminding us the relationships shared between world's markets. Sure, we can believe that with capital accounts still not entirely opened up, China's stock market is still relatively independent. But we should admit that on both financial and psychological levels, China's stock markets are much more influenced by outside forces.

This is why we say that China should accept that it stands in the same boat as everyone else concerning these issues. Admitting this enables us to get more precise measurements of market risk and implement macro-policies from a global perspective. For example, if the global economy is slowing down and these outside forces are evolving rapidly, China’s tight monetary policy should take on a new meaning. And if global capital starts to gush to emerging markets in the face of a US recession, China may face greater pressure to appreciate the yuan.

It also means we should be cautious over potential systemic risks. Current data indicates that the influence of the subprime lending crisis on the Bank of China may be more serious than previously optimistic estimates indicated. In face of more losses, we should ask how those investment decisions were made in the first place, and whether or not we have risk control mechanisms and early warning systems.

Many of China's large state-owned banks listed in the past five years have already exceeded established, famous international banks in market value. Those changes happened during rapid economic development, and have yet to be eroded by an economic downturn.

China is on the way of opening up its economy and financial industry further. If US economy takes a dive, Chinese may very well find out that today, no-one can wrap themselves in a cloak of independent development. The plus to this is that China's growing economy may stabilize the global one, and as it is further adjusted within it, start taking charge of its role on the world stage.