Economic slowdown in China – Current assessment and global implications

The Kiel Institute’s researchers Klaus-Jürgen Gern, Philipp Hauber and Galina Potjagailo address the question of what a sudden and temporary collapse of growth rates in China would mean for the world economy. While official statistics still point to growth of 7 per cent year on year, alternative measures of economic activity show signs of a slowing Chinese economy. With two global models the researchers run simulations and show that a “hard landing” of the Chinese economy (a drop in growth rates of three per cent) would have significant effects on the world economy, reducing global production by roughly one per cent. The impact across countries varies with emerging market economies generally more adversely affected than advanced ones. However, the German economy – due to its strong trade links to China – would suffer a bigger hit than its European neighbours.