You can stick a fork in the U.S. economy. It’s done. Hope for an abbreviated European slowdown has also evaporated. So now the world turns its desperate eyes towards the developing world. And it ain’t looking good there either.

On September 30th, I talked to you about Brazil, Russia, India and China. I said that “it’s hard to talk about the BRICs as a whole. But this one thing is true. They’re not immune to the world’s economic problems. And even Brazil will suffer if the U.S. can’t solve the credit crisis.”

That was just three weeks ago. Since then, we’ve had Iceland needing a big loan from Russia in order to avoid going bankrupt. We’ve seen bailouts of huge banks like USB of Switzerland and Royal Bank of Scotland. Asia finally joined the bailout parade with emergency measures to provide funding to ailing banks when needed.

These countries are getting hit hard where it hurts the most: exports and commodity prices. Some countries like Hungary, the Baltic states and South Africa were already in trouble, thanks to large external debts and narrow revenue bases. Now, their economies are on life support.

As you can see, as bad as the Dow has performed over the last six months, emerging markets (the blue line – represented by the iShares Emerging Markets Index) have done much worse. They’ve lost 50 percent of their value and their plunge since mid-September has been much more dramatic than the Dow’s.

But even if they spend a chunk of it, will it be enough? I posed the same question to you three weeks ago. The only difference now is that the whole world seems to be looking to China to save them.

Here’s what the Washington Post said on Saturday: “Perhaps the only major economy that remains robust despite the crisis is China.

“While it is suffering from a collapse of its stock and real estate markets and a decrease in demand for its exports, many economists continue to argue that the global slowdown may actually be beneficial because China’s economy had been in danger of overheating.

“Pakistani President Asif Ali Zardari arrived in China Tuesday … ‘China is the future of the world,’ Zardari said, according to the official state news agency. ‘A strong China means a strong Pakistan.’”

Robust? Really? We’re going to find out if China’s economy is capable of going one way (up) while its stock market, real estate market and exports go the other way (down). But it’s hard to imagine hundreds of companies in China not going under as export sales dry up … hard to imagine China growing as the rest of the world’s markets shrink … and hard to imagine China’s economic growth not falling below eight percent a year for the following few quarters.

China saving the world? I don’t think so. If we’re depending on China to get us out of this mess, we’ve already lost.

Source: No Refuge in Emerging Markets