ONE question has dominated the International Monetary Fund's (IMF) annual meeting this year in Peru: Will China's economic downturn trigger a new financial crisis just as the world is putting the last one to bed? But the assumption underlying that question - that China is now the global economy's weakest link - is highly suspect.

China certainly experienced a turbulent summer, owing to three factors: economic weakness, financial panic, and the policy response to these problems. While none on its own would have threatened the world economy, the danger stemmed from a self-reinforcing interaction among them: weak economic data leads to financial turmoil, which induces policy blunders that in turn fuel more financial panic, economic weakness, and policy mistakes.

Such self-reinforcing financial feedback is much more powerful in transmitting global economic contagion than ordinary commercial or trade exposures, as the world learnt in 2008-09. The question now is whether the vicious circle that began in China over the summer will continue.