Renewed fear of global recession as companies rein in spending plans The resource industry accounted for 42pc of global capex spending last year. This is now crumbling, with little else ready to take its place. "If the commodity 'super cycle' is drawing to an end, capex growth rates could remain depressed for years," said S&P. The grim data come amid fresh signs of a trade slump in Asia. Recent Asian export data have been little short of disastrous. Momentum has turned negative, running at -3pc in May," said Mole Hau from BNP Paribas. Japan is recovering but it has done so through a 30pc fall in the yen, inflicting a deflationary trade shock on the rest of Asia and China. Chinese exports fell 3.1pc in June from a year ago, the biggest drop since the Great Recession. Car exports crashed by fifth. Morgan Stanley said China's authorities are willing to risk an outright recession to purge credit excess from the system, and this could lead to a "bumpy ride" with growth falling below 6pc next year. However, it may prove hard to calibrate a soft landing after the explosive growth in loans since 2008. Fitch Ratings says credit has jumped from $9 trillion (£5.9bn) to $23 trillion, increasingly in the shadow banking system. The risk is overkill, leading to a full-blown financial crisis. Premier Li Keqiang talked of the need to "stabilise growth" this week, the first hint that Beijing may soon start to relax policy to avoid going too far. The US Federal Reserve's talk of winding down stimulus has inflicted a major credit shock on the entire global financial system, triggering a liquidity squeeze in Asia and much of the emerging world. It has been a disaster. Real borrowing costs have gone up 70 to 100 basis points across the world," said Andrew Roberts. "The Fed has clearly been shocked by the vehemence of the market reaction and now they are trying to soothe everybody with talk of gradual tapering," he said. Fed chairman Ben Bernanke said on Wednesday that "highly accommodative monetary policy for the foreseeable future is what's needed in the US economy." Markets seized on his comments as a sign that the Fed is backing away from plans to taper bond purchases, yet it is far from clear whether this is the case. Mr Bernanke has been trying to walk a fine line, insisting that less quantitative easing is not tightening. He is having trouble selling this distinction to monetary experts. The Fed launched QE to replace rate cuts once they had reached rock bottom, and it was deemed policy loosening at the time. The reverse must hold true. A reduced pace of bond purchases reduces the growth of M3 broad money. It appears that the Fed still intends to go ahead with tapering in September, but hopes to reassure markets with a pledge that interest rates will remain super-low for a long time. A chorus of monetarists say it is a grave policy error. The world is already feeling the chill.