The market's worst fears have been realised: China is slowing down.
China, which is the world's second-biggest economy behind the United States, has reported its weakest quarterly economic expansion since the Global Financial Crisis. The country's growth rate slid to 6.8% during the period, or 6.9% for the year, which was just below the government's target of around 7%.
That rate of growth is still considerably higher than what is being experienced by most Western countries. But for China, it is the slowest annual growth rate in a quarter of a century with fears it will continue to slow down at a rapid pace.
Indeed, China's economic growth has been at the epicentre of the heavy sell-offs in share markets around the globe since the beginning of the year. The Australian share market has by no means escaped unscathed, with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) falling to its lowest level since mid-2013. It's down roughly 8% since the beginning of January.
Before we get too carried away however, it should be noted that such a result was to be expected. It's a well-known fact that no economy – particularly one the size of China's – can sustain double-digit growth into perpetuity, and that it was always going to slow down at some point.
Of course, the fear is that China will experience something of a hard-landing, or that the country mightn't be able to handle the slow down. The reliability of the numbers reported by China's government has also been questioned, but in reality, the numbers themselves are all we really have to go off.
Foolish takeaway
A slow down is inevitable. It is real and it does create a headwind for our own economy as a result of our close trade relations. Commodity prices also continue to plunge as a result, with companies like BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO), as well as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) paying the price.
However, investors do also need to look at the bigger picture. Although I think investors would be wise to avoid investments in those companies directly vulnerable to the slow down, such as those mentioned above, they should also be open to the many opportunities being created in the share market as a result of the panic. With the ASX 200 down heavily since the beginning of the year, there are plenty of these opportunities currently presenting themselves to long-term investors.
