Since 2021, the slowdown in the Chinese economy compared to its pace of growth before the pandemic has been confirmed: activity grew by 5.2% in 2023 and the IMF is expecting growth of 4.6% in 2024 against +7.7% per year on average in the 2010s. This slowdown is partly structural, linked to the ageing population and the catch-up dynamic that is losing momentum. In addition, China is suffering from some more short-term factors affecting growth, such as the real estate crisis, trade risks and even financial risks. This Chinese slowdown may have differing effects on its partner economies. On the one hand, a slowdown in Chinese domestic demand would negatively affect growth in the rest of the world, via the trade channel: this would be of particular concern to countries with strong commercial dependence on China, starting with the Asian economies. Conversely, such a slowdown would result in a decline in global demand for commodities and especially petroleum products, which would lower prices: this effect would benefit other economies importing petroleum products, especially European economies.

The transmission of the shock via the trade channel is analysed using an OECD Inter-Country Input-Output (ICIO) Table. This study shows that the effects of the slowdown in Chinese domestic demand vary depending on the products concerned: as long as the negative demand shock remains confined to the construction sector, its effect on China’s partners is likely to be limited. An investment shock, which would have the effect of reducing Chinese demand for manufactured products, could have more serious consequences. Irrespective of the shock considered, the Asian economies would be the first to be affected, due to their degree of dependence on the Chinese economy. As for the main European economies, a 5% shock on Chinese domestic demand would cost France between 0.1 and 0.2 points of GDP via the trade channel alone, and twice that for Germany. This effect would therefore be contained.

By taking the commodities channel into account these effects can be further qualified because the Chinese slowdown would generate a drop in prices, particularly oil prices, which would in turn have a positive effect on French growth. A 5% shock on Chinese demand via a combination of the trade channel and the commodities channel would thus have a weak and ambiguous effect on France: depending on the assumptions made for each of these two channels, the net effect would either be slightly positive, or slightly negative. These simulations do not take into account a possible financial channel: the direct exposure of the French economy to the Chinese financial sector appears limited and an indirect effect routed through an uncertainty shock seems difficult to quantify.