America caught a cold and now China has one too. 

IMF chief Dominique Strauss-Kahn said on Monday that the Fund could cut its forecast for China’s economic growth in 2009 to around  5 percent. To think that only last year China was galloping at a double-digit clip. It’s staggering, and it’s worrying.

Worrying, for one thing, because  - as the Heritage Foundation’s Derek Scissors puts it - ”the American economic slump is running into the Chinese economic slump, creating the conditions for a face-off between Beijing and the U.S. Congress, possibly leading to destabilization of the world’s most important bilateral economic relationship”. 

He argues that the new U.S. administration, confronted with a record-breaking bilateral deficit and soaring unemployment, could impose prohibitive tariffs or erect other barriers to Chinese goods. The EU, Japan and others would then be permitted by WTO rules to raise barriers against a diversion of Chinese goods to protect their markets, and “some form of Chinese retaliation is certain”.

“If intemperate, such retaliation will prompt further action by the U.S. and perhaps other countries, threatening the global nature of the trading system,” Scissors concludes.

Michael Pettis, a professor of finance at Peking University, blogged on the same theme last month, warning that Smoot Hawley, the notorious U.S. tariff act that contributed to the Great Depression of the 1930s, could return in a different guise.

Pettis says that while everyone is watching to see if Washington re-enacts new versions of Smoot-Hawley, the real threat may come from current-account-surplus countries which seek to support their export sectors.  There are indeed signs that China is looking to export its way back to vigorous growth through subsidies, raising import tariffs and perhaps currency depreciation (see the grumbling from France’s Anne-Marie Idrac only yesterday on the yuan). 

The bitter lesson from the 1930s is that not all countries can export their way back to economic health at the same time. And if they try, there will be a fight.

As journalists, we spend a lot of time watching politicians and policies to guage their impact on financial markets and economies. Now, as recession takes an inexorable hold in the Asia-Pacific region, we’re watching for the impact on politicians themselves.

 So far there has been no repeat of the political upheaval triggered by Asia’s economic crisis a decade ago, which culminated in the ignominious resignation of President Suharto in Indonesia and the ouster of Thailand’s prime minister (see previous blog). There are no food riots as there were back then, and Asians are not crowding at  banks’ doors to rescue their savings.

The Economist magazine argues this week that Asia’s economic downturn will be milder than the one it endured a decade ago, when Asian governments begged households to be hand over their jewellery to be melted down to bolster official reserves.

That seems to be the consensus view. The president of the Asian Development Bank, for instance, argued in a speech this month that the region was well positioned to weather the global downturn and predicted that it should “avoid a full-fledged financial crisis”.

So can the region’s politicians breathe easily? Probably not.

In New Zealand earlier this month, Helen Clark’s nine-year-old Labour government was bounced from power by voters. Analysts reckon she was always heading for defeat at the hands of an electorate ready for change, but any hopes that she would make a last-minute comeback were dashed by the economy’s slide into recession.

In India politicians too face a tough year, with national elections due in early 2009 after a difficult 12 months, first of soaring inflation and now of global economic turmoil. Jobs are disappearing, factories are putting expansion plans on hold and even the country’s tourism boom is coming to an end.

For more on India, take a look at Reuters’ investment summit stories this week.

The Hindu-nationalist Bharatiya Janata Party lost power in 2004 after its “India Shining” message of economic liberalisation and growing corporate confidence failed to connect with the millions of voters for whom a first car, apartment or refrigerator is once again moving out of reach.  Will Sonia Gandhi’s Congress Party face a similar fate? There’s a test of the political waters in the central state of Madhya Pradesh this week.

Indonesia also goes to the polls next year. Will voters reward Susilo Bambang Yudhoyono, a respected reformer who has brought the economy back from the brink, by re-electing him as president? Or could the financial crisis, which has savaged the rupiah, bring his rival, Megawati Sukarnoputri, to power again?

Could the economic downturn even have a political impact on Singapore, which last week published figures confirming the city-state is in recession? The Financial Times’ take was that the downturn may prompt Prime Minister Lee Hsien Loong to call an early election “in case economic pain leads to a backlash against the People’s Action party that has ruled Singapore for 50 years”.

It even speculated that “the severity of the downturn could determine the continued durability of the Singapore model, seen as a pioneer of authoritarian capitalism, in which the public gives up some civil liberties in return for economic prosperity”.

That may be over-stating the case. 

But for sure Asia’s political landscape could look very different when the current economic downturn is over.