There is no doubt advanced industrialized countries are in a deep economic downturn. Given that consensus expectations from newswire surveys of economists continue to overshoot the actual data, it appears that many still do not fully appreciate the magnitude of the downturn; the fact that policymakers continue to cut growth forecasts implies they, too, have not appreciated the depth of the downturn.

There is hope in many quarters that China, after passing Germany last year as the world’s third-largest economy, will remain relatively insulated. This optimism is based on structural factors — where China is in its industrialization process, the command features of its capitalist economy with Chinese characteristics, and the vast resources it can bring to bear on its economic challenges. Late last year, China announced a 4 trillion yuan (around $585 billion) fiscal stimulus package, and on Jan. 11, Premier Wen Jiabao promised it would be increased.