Global Spillovers of a Chinese Growth Slowdown

Shaghil Ahmed, Ricardo Correa, Daniel Dias, Nils Gornemann, Jasper Hoek, Anil Jain, Edith Liu and Anna Wong
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Shaghil Ahmed: Board of Governors of the Federal Reserve System, Washington, DC 20551, USA
Jasper Hoek: Board of Governors of the Federal Reserve System, Washington, DC 20551, USA
Anil Jain: Board of Governors of the Federal Reserve System, Washington, DC 20551, USA
Anna Wong: Bloomberg LP, New York, NY 10022, USA

JRFM, 2022, vol. 15, issue 12, 1-23

Abstract: This paper analyzes the potential spillovers of a slowdown in Chinese growth to the United States and the rest of the world. Through a combination of structural VAR and DSGE analyses, we find that (1) spillovers from China to the rest of the world have grown significantly in the past decade; (2) the negative growth spillovers to the United States are more modest than to emerging market economies—particularly for commodity exporters—or other advanced economies, primarily because the latter group has larger direct exposure in trade to China; and (3) although the United States has limited direct financial exposure to China, the negative spillovers to the U.S. economy are amplified significantly if the negative Chinese growth shock leads to adverse global risk sentiment and monetary policy in the United States is constrained in its reaction.

Keywords: China; growth; spillovers; financial system (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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