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

Author

Listed:
  • Irma Alonso

    (Banco de España)

  • Daniel Santabárbara

    (Banco de España)

  • Marta Suárez-Varela

    (Banco de España)

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.

Suggested Citation

  • Irma Alonso & Daniel Santabárbara & Marta Suárez-Varela, 2023. "The potential global effects and transmission channels of a slowdown in Chinese growth," Economic Bulletin, Banco de España, issue 2023/Q4.
  • Handle: RePEc:bde:journl:y:2023:i:04:n:06
    DOI: https://doi.org/10.53479/35632
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    More about this item

    Keywords

    China; slowdown; spillovers; commodities; uncertainty;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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