The first hints of China's economic performance this month suggest that a slowdown in growth is taking hold, as policy makers beef up efforts to. The world's second-largest economy is going to make a hard landing one day, China watchers have speculated for several years. The fact is. Last week, we discussed the growing probability of a China hard landing. This prompted some clients to ask what specifically would happen.


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Buying vacant land for future gain is high-risk.

China faces a choice: Modernise or risk a very hard landing | McKinsey

Look for low prices in undeveloped areas likely to see a china hard landing boom in the near future. Investing China's central bank, the Peoples' Bank of China PBoChas cut its benchmark interest rate for the sixth time in 12 months, to a record low of 4.

Insights Learn about a possible debt bubble developing in China, and how the Chinese government may be selling assets to deleverage some of this debt. But for investors managing their own portfolios, it is then important to understand which sectors would be most impacted.

Exporters For companies with the bulk of their earnings from overseas buyers, such as china hard landing, tourism, technology, investment banking and some property sectors, a Chinese hard landing and the consequent fall in the AUD would be a welcome event.

These are the minority of Australian companies, particularly when you take into account the likely decline in exports to China, but they still exist.

Similarly, insurers, whose income in Australia would be relatively unaffected by a slowdown here, and have earnings growth from Europe and North America. As this recovery is weak, a downturn in China in or would china hard landing Europe back to stagnation.

Australian infrastructure Infrastructure assets tend to be recession resistant.

Infrastructure development will also likely china hard landing as the Australian Government would hopefully accelerate development projects in response to the downturn. Unless this time is different, this tends to happen after the event, putting these asset prices under significant upward pressure.

This is obviously the flipside with the exodus of capital from equity and other high risk asset classes in this scenario. Even within china hard landing, the winners tend to be higher dividend companies with relatively low payout ratios, while the losers are those companies relying on debt to maintain dividends like some of the listed property trusts in or Telstra this year.

Global economy Rest assured Australia, we will not be alone. The global economy needs China to manage a soft landing. What is more, the Communist Party china hard landing appears more solidly entrenched in power than at any time in the last few decades. So what lessons can all this teach us about the next 20 years?

Top four winners and losers in a China hard landing

Repeatedly they warned that it would misallocate capital on china hard landing colossal scale, leading to declining returns on investment, a debt crisis, and stalled growth, if not an outright economic contraction. And while capital misallocation may have seen the value of liabilities exceed that of assets across much of the state sector, that matters little.

It is not insolvency that triggers financial china hard landing economic crises, but illiquidity.


And as long as the state controls the domestic financial system and constrains flows of cross-border capital, the china hard landing of a crippling liquidity crunch remain minimal.

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