It was back in 2007 that China’s then premier Wen Jiabao voiced alarm that the country’s growth was “unstable, unbalanced, uncoordinated and unsustainable”. Since then, China’s growth has defiantly continued to surge, to the admiration of some, and the alarm of others. But there are signs we are veering into a perfect storm fuelled by the tariff war between the United States and China, technological conflict , US national security paranoias , unsustainable credit and debt growth inside the mainland, continuing struggles to resolve the harm inflicted by the 2008 global financial crisis , and, of course, the still-evolving coronavirus shock emanating from Wuhan. And before anyone crow too enthusiastically over China’s gathering storm, evidence seems strong that China’s shock may be shared by us all. Rana Foroohar wondered in the Financial Times earlier this week whether the coronavirus outbreak was “exactly the sort of unexpected trigger event that many market participants have been fretting about”, adding: “We might be about to see something new: a global slowdown led by China, rather than the US.” As the tens of thousands of Chinese factories at the heart of global supply chains ranging from cars to smartphones remain closed , and as hospitals wrestle to control the virus, so international giants such as Apple , Walmart, Starbucks , Hyundai, Toyota and dozens of others are warning of significant collateral damage in markets across the world. As China’s high-spending tourists stop flying abroad, airlines, hotels and thousands of tourism-dependent enterprises worldwide have felt a cold shudder bristle down their spines. And as Chinese consumers batten down and stay at home, China’s domestic retail economy faces a sharp downturn that could produce thousands of small-business casualties , and tough times ahead for international luxury brands that have for years relied on China as their largest and fastest-growing market. Of course, if the coronavirus crisis proves short-lived, then harm may be limited. But even now, after just two months of dislocation and the prospect of at least two months ahead before any calm might be restored, the scale of harm is unlikely to be small. For example, overseas spending by Chinese tourists in 2018 (the last year for which data is available) amounted to nearly US$280 billion – an average of about US$23 billion a month, and about 16 per cent of tourism spending worldwide, according to the United Nations World Tourism Organisation. International travel appears likely to have fallen by at least 20 per cent since December (visitors to Hong Kong were already down by around 50 per cent in December, year on year, six months after street protests escalated), which implies that losses for international tourist destinations are likely to be around US$4.6 billion a month. Assuming disruption for a minimum of four months, that means losses for airlines and the global tourism sector of over US$18 billion. It is not just Cathay Pacific Airways that has slashed flights to China destinations: American Airlines , Delta Air Lines , United Airlines , Lufthansa and British Airways are among leading airlines that have slashed services to curb their losses. Back in 2003, the severe acute respiratory syndrome pandemic focused on Guangdong and Hong Kong sent shock waves across the global economy, and cost an estimated US$40 billion. At that point, China accounted for just 4.3 per cent of the world’s gross domestic product. Imagine, then, the augmented impact now that China’s economy is the world’s second largest, accounting for more than 17 per cent of the global GDP. The fallout is unlikely to be pretty. Could coronavirus outbreak spark a rise in global food prices? China’s consumer market – badly hit by the virus – is bigger than the US and European markets combined, with the e-commerce market alone worth US$615 billion in 2015, and while it is dominated by domestic vendors, it is significant for most internationally prominent brands. Beijing-based research group Plenum said Lunar New Year spending was down 40 per cent from 2019. No wonder international groups such as Apple and Walmart have shut down their massive Chinese retail store networks. Other indications of the alarming implications for the global economy of a contraction in Chinese consumer and manufacturing demand is visible in the natural resource markets . Oil prices have slipped by more than 10 per cent. Iron ore and copper prices are down by a similar percentage, since Chinese demand for base metals accounts for about 50 per cent of global demand. Palm oil prices have plunged. Prices for steel rebar are also sharply down. Economists predict that the coronaviral dislocations will cut 2 percentage points on an annualised basis off China’s GDP growth, which had already been forecast to fall to 6 per cent for 2020. Even if the viral disruption lasts for just a quarter, that suggests 2020 growth will slip to 5.5 per cent or lower. For a GDP of over US$14 trillion, that loss of growth amounts to at least US$70 billion. This is significant not just for Beijing, because Chinese growth has been by far the largest contributor to global growth since the 2008 global financial crisis. At its peak in 2012 and 2013, China’s growth in dollar terms accounted for 58 per cent and 48 per cent of global growth respectively. Even in 2017, it accounted for 23.5 per cent of global GDP growth, in 2018 almost 30 per cent, and last year an estimated 39 per cent. For a global economy still sputtering close to recession , a China contraction has immense global significance. Even more troubling, the US$586 billion stimulus package injected by Beijing after the 2008 global financial crash – a massive contributor to stabilisation at the time – is unlikely to be available if a recession threatens this time round. Back in 2008, China’s debt was “just” 160 per cent of GDP, but today, after a heady build-up of government debt over the decade, it stands at 300 per cent . Many say this is, in its own right, dangerous and unsustainable. It undoubtedly constrains Beijing’s freedom of movement to flood funds into the markets in the event of a recessionary downturn. I am reminded of a warning in an International Monetary Fund research paper in 2018: “China’s credit boom is one of the largest and longest in history. Historical precedents of ‘safe’ credit booms of such magnitude and speed are few, and far from comforting.” Until recently, only a US economic recession had the potential potency to trigger a global recession. Today, that may no longer be true. As Foroohar warned: “The US still matters a lot in the global economy, but much less than it used to. China, on the other hand, matters much more.” We should beware of this perfect storm. David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view