A "hard landing" in China, where economic growth slows to 3.8 per cent this year, would lop 1.5 percentage points off world growth, according to a grim scenario described by Société Générale in a recent research note.

SocGen doesn’t think it will happen. It is forecasting growth of 6.9 per cent this year, after the economy expanded by 7.7 per cent last year. But last year’s growth was the lowest in China since 1999, and SocGen believes the risk of a hard landing is rising.

The bank says the Chinese leadership is trying to steer the economy towards more sustainable growth by instituting market reforms, which will mean slower but more manageable growth. At the same time, it is trying to deflate a credit bubble. The risk remains that deleveraging gets out of control and leads to a hard landing, a scenario that would reverberate all over the world.

China’s imports account for 30 per cent of its GDP, which makes it a major source of global demand. Cut back that demand significantly and you have a major problem in Asian economies, which rely on exports to China and on the big commodity exporters.

Among the elements SocGen’s analysts see as particularly worrying include a private- sector credit bubble, which would be possibly the third- worst the world had seen in recent years.

It’s not all bad news. A 30 per cent drop in the price of oil as China slowed would give growth a boost in other markets, as would an accompanying easing of monetary policy by overseas central banks.

Even if Chinese growth slows to 6 per cent and growth in the US to 2 per cent, the world economy could still expand by almost 3 per cent this year.