The historian Arnold Toynbee liked to characterise the US as a large, friendly dog in a very small room: every time it wagged its tail, it knocked over a chair.

Today he might have said the same of China (though friendly is not the adjective that springs immediately to mind). Trade, investment and financial linkages between China and the rest of the world have intensified dramatically, so everyone is hurt when chairs in the Chinese economy are knocked around.

The stock market plunge was bruising evidence of the extent of economic interdependence. On the face of it, financial linkages between China and the rest of the world are loose. The financial sector is not outward-looking, and the capital account has yet to be fully liberalised. While China is the leading destination for foreign direct investment flows, it accounts for less than 5 per cent of the total stock of inward FDI.