The world's second-largest economy, home to more than 1.4 billion people, is facing a host of problems - including slow growth, high youth unemployment and a property market in disarray.Now the chairman of the country's heavily-indebted real estate developer, Evergrande, has been placed under police surveillance and the company's shares have been suspended on the stock market.
"If Chinese people start cutting back on eating out for lunch, for example, does that affect the global economy?" asked Deborah Elms, executive director of the Asian Trade Centre in Singapore."The answer is not as much as you might imagine, but it certainly does hit firms who directly rely on domestic Chinese consumption."But there are longer term questions for people in the developing world.
Hundreds of big global companies such as Apple, Volkswagen and Burberry get a lot of their revenue from China's vast consumer market and will be hit by households spending less. The knock-on effects will then be felt by the thousands of suppliers and workers around the world who rely on these companies."This is good news for people and businesses struggling to deal with high inflation," Mr Rajah says. So in the short-term, ordinary consumers may benefit from China's slowdown.
When you consider that China is responsible for more than a third of the growth seen in the world, any kind of deceleration will be felt beyond its borders.The US credit rating agency Fitch said last month that China's slowdown was "casting a shadow over global growth prospects" and downgraded its forecast for the entire world in 2024.Over the last 10 years, China is estimated to have invested more than a trillion dollars in huge infrastructure projects known as the Belt and Road Initiative.
However, if there is one lesson to learn from history, it is to expect the unexpected. As Ms Elms points out, few people before 2008 anticipated that subprime mortgages in Las Vegas would send shockwaves through the global economy.The echoes of 2008 have got some analysts worried about what is known as "financial contagion". This includes the nightmare scenario of China's property crisis leading to a full-blown collapse in the Chinese economy, triggering financial meltdown around the world.
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