The sudden concern is could China's real estate crisis launch a systemic financial crisis like the collapse of US investment bank Lehman Brothers in 2008, triggering the worst economic crisis since 1929? "Investors fear China's 'Lehman moment' is looming," headlined the Wall Street Journal in an article on Friday, August 18, quoting Xiaoxi Zhang, a financial analyst at Gavekal Research. "The worry is that a 'Lehman moment' beckons, threatening the solvency of China's financial system," she wrote, before estimating that Beijing's "regulatory vigilance" makes such an outcome unlikely.

On Wall Street, observers are wary, especially as the Chinese crisis coincides with the rise in US long-term interest rates, which on Thursday reached their highest level since 2007 (at 4.329%), heralding the definitive end of the free money that has prevailed since the Great Recession. "Markets are being hit by the perfect storm, amid surging rates, worsening economic data in China, poor summer liquidity and a buyers’ strike," wrote Emmanuel Cau, head of European Equity Strategy at Barclays.

Could the Chinese crisis create a domino effect across the globe? "There will be no Lehman effect," dismissed Patrick Artus, chief economist at Natixis. "There is no amplifying or leverage effect. These will be dead capital losses for investors," said the economist, who acknowledged that it is very difficult to know who holds the $200 billion (€184 billion) debt of Country Garden, a giant Chinese developer that defaulted on its international debt this week.

A 2022 study by the European Central Bank (ECB) estimated that, with a closed market, a financial shock in China had half the effect on global equity markets than an equivalent shock in the USA. On the other hand, the impact is greater on energy and raw materials markets, as China consumes 56% of the world's copper, for example.

The difficulties faced by China, the world's second-largest economy, will undoubtedly weigh on the global economy and its main trading partners, especially Japan, South Korea and Germany. In mid-July, Germany, which exports machine tools and automobiles to China, presented a plan to free itself from the Chinese geopolitical risk.

"We do not want to decouple from China, but minimize our risks. The more diverse trade and supply chains are set up, the more resilient our country is," said Annalena Baerbock, Germany's Foreign Minister, adding that Berlin could not afford to have to "pay more than €200 billion to get out of a dependency," as is the case with Russian gas.

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