Feature Article: Global spillovers from a weaker China likely to be modest.

The article "Global spillovers from a weaker China likely to be modest" discusses the potential impact of a slowdown in China's economy on the rest of the world. It suggests that while China's role in the global economy is significant, the effects of a severe slowdown would likely be moderate. The impact would be felt more strongly in neighboring Asian economies and economies with deep trade links to China. The United States, on the other hand, would likely experience a small impact due to its relatively low trade exposure and modest financial links with China. The article also highlights that a fiscal policy response in China to offset the downturn would significantly increase the country's government debt. The exposure of foreign banks to China is a possible channel for financial contagion, with Hong Kong and Singapore being the most vulnerable due to their high percentage of bank assets tied to China. However, for advanced economies, these exposures are much smaller. A simulation of a severe downturn in China's housing market shows modest global spillovers, with Asian economies being the most affected. The article argues that assumptions of larger spillovers are unrealistic and that the international impacts of a Chinese slowdown are likely to be smaller than claimed. [Extracted from the article]