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
