Chinese soothsayer sees economic storms ahead On the first day of every lunar new year, scores of minor government officials, businessmen and ordinary peasant farmers congregate at a small Buddhist temple in the hills outside the eastern Chinese city of Suzhou. They come to consult the resident "master," the abbot of the increasingly wealthy and popular temple who has made a name for himself as an unnervingly accurate soothsayer. As the Chinese world bid farewell to the year of the rabbit and entered the year of the black water dragon on Monday, I went to ask this oracle what he thought was in store for the global economy and for China in the coming months. The dragon is the only mythical beast of the 12 animals in the Chinese zodiac and is supposed to bring unpredictability and change. But the master's forecast for the European economy was predictably gloomy and his outlook for the US was not much better. "The global economic war is not yet over and there are more storms coming for the US and Europe - this will negatively affect Chinese imports and exports alike," he said. China's domestic economy was likely to be worse than last year and quite a few export-oriented factories would go bust, he offered. But the country would not experience a crisis in its financial sector this year, the master confidently predicted. This is a big call, considering the huge mountain of local government debt that has built up in the banking system and rising concerns about a growing crisis in the "shadow banking" system. A significant portion of the enormous and historically unprecedented loan growth in the Chinese economy in the last few years has gone to building property, which makes up almost all of the collateral for local government lending. There are growing signs of a looming crash in the Chinese property market, which directly accounts for well over 10 per cent of gross domestic product, and many analysts believe this is the biggest risk to the country's economy this year. In what should be especially reassuring news for commodity-exporting economies like Brazil and Australia, the fortune-telling Buddhist master sees a year of house price stagnation but no big collapse in the all-important sector. He is less sanguine about the slumping Chinese equity market, which is down about 14 per cent from this time last year. "The Chinese stock market and stock investors are like little children playing with toys - there are no rules and it is very immature and this year will be especially inauspicious," he said. Far more important for the country will be its growing investments overseas, which will see big losses this year if the master has divined the future correctly. But he also foresees China's enormous fiscal and financial resources as being ample for the government to do what is necessary to keep growth at home humming along at a fast clip. It is not all economics. The year of the dragon has in the past often prompted momentous shifts in the global political landscape. The dragon year of 1988 prepared the world for the demise of the Soviet Union and global communism the following year and also set the stage for the 1989 Tiananmen Square uprising and subsequent massacre in Beijing. The previous dragon year, in 1976, saw the death of Mao Zedong, the official end of the Cultural Revolution, and the worst earthquake in Chinese history level the city of Tangshan, killing hundreds of thousands. The last time the world saw a black water dragon was in 1952, the year that Queen Elizabeth II ascended the British throne. This year will see the Queen, herself born in the year of the fire tiger, mark her diamond jubilee, having ruled for a full 60-year cycle in the Chinese zodiac. Towards the end of this year, China's own version of royalty will ascend the dragon throne in the stout form of Xi Jinping, the "princeling" son of a revolutionary general who will take over as Communist party general secretary from President Hu Jintao. The country's leaders and security apparatus are on high alert for any sign of dissent or rebellion that could mar this once-in-a-decade power transition. If the Buddhist master of Suzhou is correct, and not just saying what his nominally atheist Communist party followers want to hear, then they have nothing to worry about and China's one-party political system will remain solidly intact in what is otherwise shaping up as a year of change and upheaval.