Forget about all the shoes, toys and other exports. China may soon have another thing to offer the world: a recession.

That is the prediction from Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, who says a continuation of China’s slowdown in the next years may drag global economic growth below 2 percent, a threshold he views as equivalent to a world recession. It would be the first global slump over the past 50 years without the U.S. contracting.

“The next global recession will be made by China,” Sharma, who manages more than $25 billion, said in an interview at Bloomberg’s headquarters in New York. “Over the next couple of years, China is likely to be the biggest source of vulnerability for the global economy.”

While China’s growth is slowing, the country’s influence has increased as it became the world’s second-largest economy. China accounted for 38 percent of the global growth last year, up from 23 percent in 2010, according to Morgan Stanley. It’s the world’s largest importer of copper, aluminum and cotton, and the biggest trading partner for countries from Brazil to South Africa.

The International Monetary Fund last week cut its forecast for global growth this year to 3.3 percent, down from an estimate of 3.5 percent in April, citing weakness in the U.S. While the Washington-based lender left its projection on China unchanged at 6.8 percent, the slowest since 1990, it said “greater difficulties” in the country’s transition to a new growth model pose a risk to the global recovery. The Chinese government expects 7 percent growth this year.

Fund Performance

China’s economy will continue slowing as the country struggles to reduce its debt, Sharma said. An additional 2 percentage point slowdown would be enough to tip the world into a recession, he said.

The global expansion, measured by market exchange rates, has slipped below 2 percent during five different periods over the past 50 years, most recently in 2008-09. All the previous world recessions have coincided with contractions in the U.S. economy.

Sharma’s $1 billion U.S.-traded Emerging Markets Portfolio has returned 2.8 percent annually over the past five years through Monday, outpacing the 2.5 percent gain in MSCI Inc.’s developing-nation benchmark, data compiled by Bloomberg show.

Sharma said he’s shunning Chinese stocks and those in countries that rely on China for growth, including Brazil, Russia and South Korea. He favors companies in eastern Europe and smaller Asian countries, such as the Philippines, Vietnam and Pakistan.