Can the world grow as China slows again?

UBS has a warning on that front:

Our global credit impulse (covering 77% of global GDP) has suddenly collapsed…as the chart below shows the ‘global’ credit impulse over the last 18 months is essentially mainly China (the green shaded bit), which even now is still creating new credit at an annualized rate of around 30pp of (Chinese) GDP. But the credit impulse is the ‘change in the change’ in credit and even the Chinese banks could not sustain the recent extraordinary pace of credit acceleration. As a result: whereas back in Jan ’16 the global credit impulse was positive to the tune of 3.8% of global GDP (of which China comprised 3.5% of global GDP) it has now fallen back to -0.1% of global GDP (China’s contribution is -0.3% of global GDP).

DM’s [Developed Markets] contribution to the global credit impulse is about ½ pp of global GDP, exactly equal to the average of the last 5 years but a few tenths below the pace back in Q3. Within DM, positive contributions are mainly coming from the US (0.2pp), UK (0.3pp) and France (0.1pp). For the US that’s largely reflecting its large GDP weight, but for France there is a clear turnaround (2 ½ pp of GDP) from a negative credit impulse mid last year to a positive one now (coinciding to some extent with the strong improvement in PMI data), and the UK is sustaining a credit acceleration that started last May. The only DM economies where the credit impulse is currently negative are Italy, Canada and Australia (combined 12% of our DM aggregate).