What China’s economic troubles mean for the world
reliance on China for revenues. In 2021 the 200 biggest multinationals in America, Europe and Japan made 13% of their sales in the country, earning $700bn. Tesla is more exposed still, making around a fifth of its sales in China; Qualcomm, a chipmaker, makes a staggering two-thirds.
Provided the slowdown does not escalate into a full-blown crisis, the pain will remain relatively concentrated. Sales to China account for only 4-8% of business for all listed companies in America, Europe and Japan. Exports from America, Britain, France and Spain come to 1-2% of their respective outputs.
Even in Germany, with an export share of nearly 4%, China would have to collapse in order to generate a sizeable hit to its economy. Moreover, China’s struggles come at a time when the rest of the world is doing better than expected. In July the imf revised up its forecast for global growth, compared with projections in April.
Most notable has been the rude health of the world’s biggest importer and China’s geopolitical rival, America, which some surveys suggest is growing at the red-hot pace of nearly 6% When set against this backdrop, China’s slowing growth should even provide a measure of relief for the world’s consumers, since it will mean less demand for commodities, bringing down prices and import costs. That in turn will ease the task faced by the Federal Reserve and other central banks. Many have already raised rates to their highest level in decades, and would not relish having to go further still.
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