China spooks markets as its economy softens, but should Europe be fearful?

We are much more vulnerable to a slowdown in China than ever before, partly because the country is simply becoming a different type of economy

Can the world still rely on the China engine? (Getty/iStockphoto)

When America sneezes, Europe catches a cold. But when China sneezes?

The popular adage about America is a simple reflection of the fact that in the past that is where global downturns have begun. Think back to the last recession: it was triggered by the US sub-prime banking crisis. But now, while the US remains the world’s largest economy overall and will do for another decade, China is larger in many areas of activity, for example car production. It is also the world’s biggest importer of many commodities, including oil.

And right now, while the US economy has continued to grow strongly, China has slowed, leading to a sharp dip in growth in Europe, notably Germany, the EU’s biggest exporter to China.