LONDON China's vast market for foreign goods and services, once seen by global companies as a modern-day El Dorado, is becoming a weight around their necks as its growth slows.
The rise of the Chinese economic "dragon" over the last two decades has transformed international business. But now the country is in the grip of a slowdown due to a slump in exports and banking sector excesses, as recent data has shown.
That has led fund managers worldwide to re-assess their investments in companies with a focus on the world's No.2 economy.
"Anything China-sensitive is performing poorly and the trend will not go away because there is no sign of growth recovery," said Maarten-Jan Bakkum, investment strategist at ING Investment Management, which has cut its holdings of China-exposed stocks.
Markets are already braced for slower commodity demand. But Beijing's recent moves, from an anti-corruption drive that has dented luxury demand to a crackdown on shadow banking, will hurt domestic demand too, Bakkum said.
Indeed, investors fear a full-blown banking crunch that could derail credit and consumption growth for years more than they fear sub-7 percent economic growth.
"Even if part of the China fears is correct, consumption will also be hit," he added.
MSCI's China Exposure Index, made up of about 50 companies that derive a significant portion of revenues from China, has fallen around 10 percent this year. Two-thirds of the losses have come in the past quarter with the darkening growth outlook.
In contrast, a similar MSCI list of stocks with exposure to developed economies has gained over 12 percent in 2013, trading off the improving outlook for the West and Japan.
Amit Lodha, portfolio manager of the Fidelity Global Real Assets Securities fund, said he favours stocks such as Volkswagen, whose China exposure is effectively hedged by its sales back to a recovering Europe.
The German carmaker's luxury division, Bentley, this month reported a 23 percent fall in Chinese sales while U.S. and European deliveries rose 12-22 percent.
"Over the longer term, consumption growth in emerging markets like China remains the theme to play. Nearer term, with some resurgence in the United States and signs of bottoming in Europe it would be better to focus on names which have exposure to growth here," Lodha said.
SEMICONDUCTORS AND CEMENT
For two decades China's 10 percent-a-year growth rates allowed foreign companies to enjoy fat profits and surging share prices. Its multi-trillion dollar infrastructure projects sucked in commodities from Brazil and Russia, as well as semiconductors and construction equipment from Germany and the United States.
Companies selling cars, clothing and cosmetics meanwhile benefited from the growing wealth of China's 1.2 billion people, whose per capita incomes have quadrupled since 2000.
China directly accounts for 5-6 percent of U.S. and European company earnings, banks reckon. The indirect share, due to Beijing's influence on commodity prices, is probably far bigger.
It economic slowdown has already hit commodities trade.
"We are not interested in investing in companies that have exposure to commodities and raw materials, goods that China has historically stockpiled. At the end of the day there is a clear reduction of demand from China," said David Bailin, global head of managed investments at Citi Private Bank.
Consumer plays may have more traction, he says.
Consumption makes up just 35 percent of China's economy, almost half the level in neighbouring India. And with 300 million-plus people deemed to be part of the middle class, the bet is that smartphones and designer gear will not lack buyers.
But prosperity and employment in China are still closely tied to trade. So the export slump along with rising inflation and higher borrowing costs caused by the crackdown on so-called shadow banking may already be biting into disposable income.
Take Swiss watch exports. These fell 25 percent in the first quarter of 2013. Sales to Hong Kong, where many Chinese shop to avoid import duties, fell 9 percent.
European luxury firms, chipmakers, energy and auto companies all derive over a tenth of their revenues from China, according to Morgan Stanley, which advised clients in a note last week to "be wary of China and emerging markets exposure".
Roughly 5 percent of U.S. earnings come from China but for some, such as restaurant chain Yum, owner of Pizza Hut and KFC, the figure is as high as 50 percent, Deutsche Bank data shows.
So a slower China is bad for company earnings and for emerging markets who rely on its custom.
But the implications stretch further still - right to the heart of the euro zone's economic recovery, says Dan Morris, global strategist at JPMorgan Asset Management.
"If you think how well Germany's economy did during the (euro) crisis and if you look at the numbers, a lot of it was down to exports - and most of that was exports to China," Morris said. "Now that we are not getting any more Chinese stimulus, German growth rates are looking the same as everyone else's."
(Editing by Hugh Lawson)