Since the start of the year, companies from Apple of the US and South Korea’s Samsung to Indian-owned Jaguar Land Rover in the UK have warned their businesses are being hit by the slowdown in China. In some cases, other corporate issues were also at play. But the warnings are a sign of the deepening economic distress in the world’s second-largest economy, and that this will have a far bigger external impact in the coming year than it did in 2018.
China’s benchmark stock market indices were the worst performing of any major economy last year, losing about a quarter of their value. But this dismal performance had relatively little effect on the outside world, thanks to the country’s strict capital controls and lack of integration with global markets. Now that China’s slowdown has spread from capital markets to the real economy, the external impact will be much greater.
China is the world’s biggest automotive market and sales fell last year for the first time since 1991. Manufacturing output contracted in December and the real estate market is floundering. Consumer sentiment, retail sales, fixed asset investment and foreign investment have shrivelled in recent months.