World markets may be underplaying the possibility of a hard landing scenario in China, says Iveagh, the Guinness family office and fund manager, which sees the next 10 days as crucial for the outcome.

Chris Wyllie, the firm’s chief investment officer, says that China has been a worry for several weeks as a result of poor corporate data. “The conclusion we have drawn from our time spent in the country is that the situation is opaque, but markets may not be taking the risk of a hard landing in China as seriously as they should,” he says.

“Over the next 10 days we will see further company reports and critical economic data, and we will be keeping a close eye on the figures,” Wyllie says. “We still see some risk that, if manufacturing continues to contract and company data continues to be weak, it could change market expectations on global growth quite suddenly.”

The trillion renminbi yuan question

Wyllie says it is difficult to get accurate data out of China, highlighting that the official manufacturing survey recently pointed to a revival while research by HSBC found a decline for the fifth month in a row. He believes that a hard landing in China could have serious repercussions for world markets: “US equity markets in particular seem to believe the US economy can decouple and follow its own growth trajectory,” he says. “They may think twice about that if China joins Europe in having growth problems."

“However, a China slowdown does not pose systemic risks for markets in a way the banking crisis did,” Wyllie says. “If it leads to weaker commodity prices, this could ultimately be a positive for future growth. So it could present a buying opportunity in due course.”

Iveagh’s fears were reflected in a recent Bank of America Merrill Lynch poll. On the other hand, Coutts, the UK wealth management arm of Royal Bank of Scotland, said at the beginning of the year that it thinks 2012 will be a good one for Chinese equities. As recently as at the end of last month, the UK private bank said that a soft landing scenario is looking increasingly likely.