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After three decades of explosive growth, China's economy is slowing, sending jitters across global financial markets.

So if China stumbles into a hard landing, how bad will the rest of the world fall?

According to HSBC economist Frederic Neumann, a slowdown in the Chinese economy is "not exactly the end of it all."

Possible clues to China's fate could be gauged from how the world reacted to Japan's economic malaise, he reckons.

At the end of the 1980s, Japan's contribution to global gross domestic product was about the same as China does today.

While the Japanese economy has failed to muster meaningful growth since then, the world "sailed on with barely a blip in the 1990s" after Japan's boom and stumble in the decade before, Neumann noted in a report.

Chart 1: China's share of world GDP (percent)

China's share of the world's growth in terms of purchasing power parity has jumped to well over 16 percent from 10 percent in the past decade while its share of global GDP in U.S. dollar terms has also tripled in the same period to just under 15 percent last year .

"So, if Chinese demand stumbles, would this knock out world growth? Not necessarily. Take the example of Japan in 1989 when the bubble burst. At the time, its share of global USD GDP was a touch above 15 percent. The subsequent slowdown, however, didn't push the world to the brink."

Chart 2: Share of imports in GDP (percent)

China imports have grown dramatically but as a major export hub, but the share of retained merchandise imports in China's GDP is lower than Japan's today, wrote Neumann. A significant share (30 percent by some estimates) of China's imports are components used for exports and thus not subject to swings in local demand, Neumann believes.

"From this perspective, then, China may not be quite as important a global growth driver as often thought."

That's not to say all is hunky dory. Neumann lists three caveats:

1. Business cycles are more synchronised today than they were in the 1980s, so a Chinese slowdown may matter more.

2. The rest of the world looks a lot wobblier today than it did in the later 1980s or early 1990s.

3. China, given the investment-centered nature of its growth, is a larger buyer of commodities than Japan ever was; raw material exporters are certainly suffering already.

Even though there are concerns about China's financial markets, the country is a net saver, which limits direct exposure for foreign investors, argues Neumann.

China is also unlikely to aggressively lower the value of the yuan.

"In fact, China may be more insulated financially thanks to capital controls than Japan was."

First Published:Jan 15, 2016 11:08 AM IST