Economic Outlook for China and Its Global Implications

China‘s economic slowdown is another critical issue facing the global economy in 2024. With an anticipated growth rate of 4.5%, the lowest since 1990 outside the COVID-19 period, China’s economic performance is under intense scrutiny. This slowdown poses substantial risks to both advanced and developing economies that have significant trade ties with China. The World Bank has emphasized that a deeper slowdown could severely impact global growth, particularly in commodity-exporting countries that rely heavily on Chinese demand​ ​.

One of the main areas of concern is China‘s property sector, which remains vulnerable and could exacerbate the economic slowdown. Stress in this sector could lead to a broader economic impact, reducing global growth by about 0.2 percentage points if China‘s growth declines by an additional 1 percentage point. This potential downturn in China would have significant implications for global supply chains and investment flows, making China’s economic trajectory a crucial factor in global economic forecasts​ ​.

China’s economic slowdown also has broader implications for global trade. The country has become a major destination for goods exports from developing economies, accounting for nearly 20% of all such exports by the end of 2021. Any reduction in Chinese demand would thus have a ripple effect across multiple economies, particularly those heavily reliant on commodity exports. This is particularly concerning for countries involved in the green-energy transition, as China is a significant consumer of commodities essential for this shift​ .

The slowdown in China is not occurring in isolation but is part of a broader global economic context marked by rising geopolitical tensions and financial stress. The sharp increase in global interest rates, the highest in 40 years, has so far not led to the kind of economic havoc seen in the 1980s. However, the situation remains precarious, with policy interest rates expected to decline slowly over the year, which might not be fast enough to prevent financial stress in some economies​ ​.