Of the fabled BRIC countries (Brazil, Russia, India and China) that were predicted to be on course to overtake the lumbering old veterans of the Group of Seven, only India's Sensex stock market index has been spared in the last hundred days, falling a mere 9 percent. But that was only because the Sensex collapsed by a third rather earlier than the others. Those who invested in the BRIC markets late and failed to get out early have lost a lot of money.

It gets worse. House prices are collapsing in China; a Morgan Stanley report last week used the word "meltdown." Russia is in the grip of a liquidity crisis as capital flees the country, so beleaguered oligarchs are pleading for public money to be pumped into the tottering market by the government raiding its strategic reserve funds. Inflation in India has topped 12 percent.

With Japan shrinking by 3 percent in the last quarter, the eurozone by about a quarter of 1 percent, and German manufacturing orders down for the ninth straight month, this is starting to look like the beginning of a global recession. So that briefly fashionable theory of decoupling, that Asia and other emergent economies could thrive regardless of the credit crunch and the slowdown in Europe and North America, has been punctured. The BRICs do not live in an enclosed and self-sufficient world where they can flourish among themselves. The slowing U.S., EU and Japanese economies were always going to reduce the appetite for China's exports.

But all this is relative. The headlines this week said that China's industrial output grew "at the slowest pace in six years," but it was still 12 percent higher than it was a year ago. China will not repeat last year's steamy GDP growth of 11.9 percent, but it is still expected to deliver around 9 percent, just as a slowing India is still expected to deliver close to 8 percent growth this year.

It is also pretty obvious that the oil-exporting countries will not be buying quite so many luxury goods nor growing quite as fast when the oil price is around $100 than earlier this year when it flirted with $150 a barrel. Nonetheless, they will still be in a position to import a lot of stuff.

Even as the BRIC countries and the Gulf states slow, they still will be booming by Western standards. And for obvious demographic reasons, their economies are likely to grow for a considerable time to come. For the foreseeable future, they will deliver the bulk of the world's GDP growth and thus will attract lots of investment. They therefore will be in the market for Western skills and Western technology and Western goods, and consequently will prevent the West's recession from being as severe or prolonged as it otherwise might have been.

Inevitably, there will be hiccups. The Chinese housing market is undergoing one right now, with the occasional riot at the plush offices of property agents as enraged customers who bought their apartments in advance three months ago see other apartments in the same block offered for sale at a 30 percent discount. But it is only in Guangzhou, Shenzhen, Shanghai and some other big cities where the housing bust has been quite so severe.

And China might even benefit from some slowing of the economy. Retail sales volumes last month were up by more than 20 percent, and the food price rises earlier this year made Beijing authorities worry about inflation, just as the 11.9 percent growth rate and rising wages made them worry about overheating. So earlier this year, the government announced that its priorities were "the two preventions," one to prevent overheating and the second to prevent inflation from getting out of control. Accordingly, the government tightened credit, which has brought inflation down from more than 8 percent to just under 5 percent and helped cut output by temporarily closing factories during the Beijing Olympics, which explains why the output of steel products, cars and pig iron fell from a year earlier.

Now, concerned by the signs that they might have overdone it and could be risking a hard landing, they are loosening credit again. Sobered by a spate of bankruptcies among textile and toy exporters, Beijing is also increasing export tax rebates and trying to slow the appreciation of the currency, which had gained more than 6 percent against the U.S. dollar. Beijing can afford it; tax revenues are up 30 percent this year and Beijing reportedly is developing a package of tax cuts and government spending worth $58 billion.

This could be more than just a remedial measure. What the global economy has been waiting for is the transition point at which China makes the shift from relying on exports and foreign investment for its growth, to relying increasingly on its own vast internal market. It will be big when it happens; some of the planning documents for China's last Party Congress suggested a 500 percent growth in domestic consumption between 2005 and 2013. Even at China's slightly reduced rate of growth, its GDP should overtake Germany's next year and Japan's by 2012. If there is to be a global recession, Beijing is determined it won't include China. And its economic management record so far is highly impressive.

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