Global Implications of China’s Economic Slowdown

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There's an old saying: "When the United States sneezes, the rest of the world catches a cold." But what if it's China that’s feeling unwell?

From slow growth, high youth unemployment, to a crippling property crisis, China is facing serious challenges. The latest blow: the chairman of Evergrande, one of China’s most indebted developers, is under police watch, and the company’s stock has been suspended.

So, does China’s economic illness matter to the rest of us? The short answer: yes — but how much depends on who you are.

China contributes to more than a third of global economic growth. That means when Chinese households spend less, global companies like Apple, Volkswagen, and Burberry, which rely on Chinese consumers, feel the hit — and so do the workers and suppliers connected to them around the world.

Exporting nations that sell raw materials, like Australia, Brazil, and several in Africa, are especially vulnerable. China imported nearly 9% less in August compared to a year ago, cutting demand for commodities like iron ore and copper.

But there’s a silver lining. Weaker Chinese demand may ease global inflation, as lower demand keeps prices down — a win for consumers in the short term.

China’s global influence also stretches through its Belt and Road Initiative, which has funneled over $1 trillion into infrastructure projects across more than 150 countries. But now, experts say that Beijing may no longer have the resources to fund these efforts at the same scale.

Could economic woes push China to soften its tone? Some argue yes, suggesting a weaker China might mend ties with the West. Yet Beijing continues to retaliate against U.S. trade restrictions, stand firm on Taiwan, and align with leaders like Vladimir Putin.

Could China's property crisis spark a global meltdown, like the 2008 financial crash? Experts say probably not. Unlike the U.S. back then, China is likely to prop up its banks, and its financial system isn’t as deeply tied to global markets.

But there’s a lesson here: don’t underestimate the unexpected. As economist Deborah Elms warns, “What appear to be local, domestic concerns can affect us all — sometimes in ways we never imagined.”

So while China’s cold might not become a global flu, it’s worth keeping an eye on the symptoms.