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The potential global effects and transmission channels of a slowdown in Chinese growth

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Issue Date
15-Dec-2023
Physical description
11 p.
Abstract
Rationale Having picked up following the end of the zero-COVID policy, Chinese economic activity is now slowing. This comes against a backdrop of, inter alia, increased uncertainty related to difficulties in the domestic real estate sector. This article examines and quantifies the different channels through which a potential slowdown in the Chinese economy could affect activity and inflation levels in the world’s major economies. Takeaways • A growth slowdown in China, partly linked to problems in its real estate sector, could pose a downside risk to activity levels in the world’s major economies. • This impact would be felt, with varying intensity, through various channels: trade, commodities and international financial markets. • In the euro area, a temporary slowdown in Chinese economic activity of 1 percentage point (pp) would reduce GDP growth by 0.1 pp in the first year, while lowering inflation by 0.4 pp.
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Economic Bulletin / Banco de España, 2023/Q4, 06
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