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Economist: China situation spells global recession

Investors beware. The world may be heading into a massive recession led by China, Citigroup Chief Economist Willem Buiter said Wednesday.

"This is classic recession scenario," Buiter said on CNBC's "Squawk on the Street," adding that the Chinese economy has recently experienced excess capacity, excessive leverage in the corporate sector and two booms, bubbles and busts in housing and stock markets.

Buiter made his remarks at a time when global financial markets have been in flux, given the slowdown evidenced in the most recent China economic data.

The Chinese government set its target GDP growth rate for 2015 at 7 percent and, in July, it reported a 7-percent annualized growth rate.

Nevertheless, Buiter added that based on the bank's models, China's economy grew at about 4 percent. "The official data is largely meaningless," he said.

"If China does worse, the U.S. and everybody else does worse. It is mitigated somewhat by weaker commodity prices," he added. "Chinese trade as a share for total world trade is larger than that of the U.S."