Slowing China economy would hit Singapore the worst, says BNP study

Regardless of whether China is the biggest economy in the world, it is of growing significance to the rest of Asia as a potential source of economic shocks.

The old market maxim that when the United States sneezes, the world catches a cold is increasingly being rephrased.

And with good reason, after many investors were left shaken by a first-quarter report that revealed Chinese gross domestic product growth at its weakest annualised rate since the global financial crisis and on course for its weakest year of expansion since 1990.

Economists at BNP Paribas crunched the data immediately after April's surprise, going back 20 years to quantify the impact of a one percentage point fall in Chinese economic output on the rest of Asia, excluding Japan, over the following year.

"China's slowing economy is raising concern about potential spillover effects beyond its shores, particularly on the rest of Asia through the trade, financial and commodity channels," they wrote in a note. "Economies with high trade exposure to Chinese final demand and commodity-producing countries are … more likely to catch a cold when China sneezes."

The BNP Paribas team found on average that 0.7 percentage point was shaved from growth elsewhere, but with wide variation related to trade dependency.

All of the nine economies it analysed have seen increased trade dependency to China since 2000, albeit to varying degrees.