As the saying goes, when China sneezes, the rest of the world catches the cold. So far, if one were to look at the macro-economic surprise indices for US, Europe, and China, it would appear that China's weakness was largely ignored by US and Europe which have notably 'outperformed' relative to expectations in the last two months. However, what is apparent is that this is a lead-lag relationship which the FT provides an excellent flow chart of how China's dominant ebbs and flows chain-react around the world's supply (and demand) chains. Furthermore, the successive peaks in economic cycles since 2009 have been lower and lower as even relatively minor shifts in China's domestic production, stockpiling, or spending can have big impacts on the other side of the world. As the IMF notes: "China can transmit real shocks widely, whether these originate domestically or elsewhere."
China's ECO Surprise Index is rolling over and has tended to turn with or before Europe and US ECO Surprise indices...
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As The FT's Jamil Anderlini notes:
The rapid integration that has made China a driver of the global economy also means that a fall in the breakneck pace of growth will have a profound effect on the rest of us. Just half a century ago, 36m people died in the country and few outsiders heard about it. Today, when China’s nouveaux riches buy fewer cars and handbags, the rest of the world pays attention.
The Global Impact of China's Slowdown
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Source: Bloomberg and FT [6]