ARI SHAPIRO, HOST:
For a broader look at the global economy, we checked in with three of our correspondents around the world - Frank Langfitt in Shanghai, Corey Flintoff in Moscow and Lourdes Garcia-Navarro in Rio de Janeiro. I started by asking Frank what the underlying problems in China are, given that the Shanghai stock market is really not tied to any economic fundamentals.
FRANK LANGFITT, BYLINE: Well, the bigger picture here is growth is slowing a lot. And most recently, what we've seen is manufacturing is shrinking. Exports are way down. Here's just one figure - coal, in the first six months of this year, was down 34 percent from the same time last year. That's a big drop. The broader problem is also overcapacity and overinvestment. You have too much steel, cement, apartments in smaller cities, even building too many cars, and this is a long-term problem. We were looking at steel mills going bankrupt several years ago, and I think what you're beginning to see now is misallocation of resources really catching up with China, and the country's starting to pay an economic price.
SHAPIRO: OK so, Corey Flintoff, in Moscow, how do those changing economic fundamentals in China affect Russia, where you are?
COREY FLINTOFF, BYLINE: Well, it's bad news. What Frank has been saying is bad news for Russia. Russia had been hoping to counter the effect of Western sanctions by turning towards China, you know, both as a political ally and as a market for Russian oil and gas. And if China's economy slows too much, it's going to mean, basically, that Russia won't be able to count on having that massive customer in Asia. If you just look at the immediate impact today, China's economic problems are pushing world oil prices lower, and that hits Russia quite hard. The value of the Russian ruble fell by more than 2 percent today.
SHAPIRO: And meanwhile, Lourdes Garcia-Navarro, you're in Brazil, which produces things like oil and iron.
LOURDES GARCIA-NAVARRO, BYLINE: And soybeans. I mean, Brazil, I think possibly more than any other country, is really being decimated by what's happening in China, and that's to do with two things. First of all, they're undergoing a massive corruption scandal at the state oil company, which has sort of paralyzed the political process. So they can't really deal with this second problem, which is that the Brazilian economy is massively overexposed to China. China is Brazil's biggest trading partner, and so it sucks up half of all of the iron ore, the oil, the soybeans, the commodities that this country produces.
SHAPIRO: OK so, Frank, in China, if the whole world feels these ripples, where does China go from here? What do you expect in the near-term?
LANGFITT: Well, one thing that would be nice is to see them stabilize the stock exchanges here, but that's going to be very difficult. What the investors have shown is that they no longer really are listening to the government. They don't trust the government to fix the problem with the markets. More broadly, I was talking to an analyst this afternoon who was saying it would be great to have a tax cut to give people more spending power and increase demand. And then you've got to consolidate. We have these sectors where there's just tremendous overcapacity. That means shutting down factories, but that also - to shut down factories means you have to start recognizing bad loans and start making layoffs, which is something so far - big layoffs, at least - that we've really avoided here in the Chinese economy.
SHAPIRO: Three NPR correspondents reporting on the economic shudders that are shaking the world today. That's NPR's Frank Langfitt in Shanghai, Corey Flintoff in Moscow and Lourdes Garcia-Navarro in Rio de Janeiro. Thanks to all of you.
FLINTOFF: It's a pleasure, Ari.
GARCIA-NAVARRO: You're welcome.
LANGFITT: Very welcome, Ari. Transcript provided by NPR, Copyright NPR.