China’s stumbling economy is the biggest threat to the world’s finances, experts claim
Could a Chinese economic collapse lead to a global financial meltdown?
A CHINESE economic crisis could trigger a domino effect that could lead to a global financial MELTDOWN, according to experts.
Political turmoil, debt and a slowdown in the nation's financial performance could cause jitters or worse across the world's markets because of the sheer size of China's economy - the second largest on earth.
The former chief economist of the International Monetary Fund Ken Rogoff said much of China's growth is based on debt and that cannot continue.
He told the : "I think the economy is slowing down much more than the official figures show.
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"If you want to look at a part of the world that has a debt problem look at China. They've seen credit-fuelled growth and these things don't go on forever."
He added: "It's definitely a worry, a hard landing in China."
British banks have an estimated investment of £410bn in China, including Hong Kong.
Rogoff's fears are echoed by Sebastien Marlier of the Economist Intelligence Unit.
He told : "China is, by some measures, the biggest economy in the world, and it is very well integrated into the global supply chain.
"Anything that happens in China will have repercussions globally."
Much of the problem lies with China's lumbering and uncompetitive state-owned enterprises (SOEs), which have struggled because of weak global demand.
China has launched a £40.59billion fund to reform the sector in the most significant transformation in two decades.
China's state sector employed around 37 million people in 2013, and accounts for about 40 per cent of the country's industrial output.
Ties between the UK and Chinese economy have recently been thrust into the limelight by plans for Beijing to build the Hinkley Point power station.
PM Theresa May has stalled the £18bn project over security and cost fears.
The joint French-Chinese project could see the Asian giant and power firm EDF paid more than £100bn over 35 years, it emerged yesterday.
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