While all eyes have been on the unfolding situation in Greece, it is China that poses the greatest threat to the global economy, says Standard Life Investments.
Standard Life Investments chief economist Jeremy Lawson said a hard landing in China would be a "large negative shock" for the global economy.
China represents 12 per cent of global GDP and 18 per cent of global manufacturing exports, Mr Lawson said – and commodity-reliant countries like Australia stand to be hit especially hard.
"China is seeing its slowest rate of economic growth since the financial crisis, along with rapidly declining commodity prices, falling export trade and a dramatic deterioration in nominal activity," Mr Lawson said.
"However, the epicentres of China’s economic problems are the industrial and property sectors.
"Growth of industrial output has declined from 14 per cent in 2011 to around six per cent in 2015, whilst industrial electricity consumption is in outright decline.
"China’s trade with the outside world is falling, and real estate investment – the primary engine of growth until last year – is going through a prolonged slump.
"The main components of activity preventing a deeper downturn are: private spending on financial services, government-led spending on transport infrastructure, retail sales and services-led electricity consumption.
"This suggests that China has begun the rebalancing towards a more sustainable, consumption-led growth model – although it’s too early to claim success," he said.
Standard Life Investment's research shows that emerging markets are in a much better position to withstand external shocks than they were in 1990, Mr Lawson said.
"Overall, the government has stepped up the pace of structural reforms – liberalising the financial system, cracking down on corruption and loosening fiscal policy, albeit in a targeted way.
"As a result we expect there to be modest success in boosting GDP although the longer-term glide path is towards slower growth," Mr Lawson said.