Emerging markets and commodity suppliers have grappled withreduced demand from China as a propertydownturn weighed on the world's second-largest economy.

U.S., Japanese, and German exporters did better, supplyingcapital goods like machines that China still demanded. That maysoon change, according to a study of global exposure to China byUBS Group AG economists Donna Kwok, Wang Tao, and JenniferZhong.

“As the multiyear Chinese property downshift continues to unfoldbeyond this year, we may see a longer-term decline in China'sappetite for foreign industrial imports,” the analysts wrote in areport June 22. “Commodity, reprocessing, and developed countryexporters alike should brace themselves for the impact of weakeningChina demand this year, irrespective of whether U.S. or EU importspick up.”

That's not good news for a world economy increasingly reliant onChina.

China quadrupled the number of countries to which it was thebiggest export market in the decade to 2014, the UBS analystswrote. In the same period, the U.S. almost halved the number ofcountries for which it held the same title.

In terms of exports as a share of GDP, nearly all countries UBScovers saw their China exposure rise. Some doubled—including Japan,South Korea, U.S., Brazil, Canada, and Chile—while otherstripled—such as Germany and the EU—and some, like Australia, evenquadrupled.

For commodity exporters including South Africa, Australia,Indonesia, and Brazil, the impact of a slowing China has beenpredictably negative.

Re-exporting countries—those most dependent on China'selectronics demand such as Taiwan, Korea, the Philippines, andVietnam—fared better. Vietnam and the Philippines did this byincreasing their market share and the value of their electronicsand textiles exports to China. Taiwan and Korea, meanwhile,increased supplies destined for China's final consumers.

The UBS economists note that the role of processing in China'sexport story has shrunk since the global financial crisis. Due toweaker developed-market demand and eroding competitiveness inlower-end and labor-intensive sectors, China is moving up the valuechain. That could mean less Chinese demand for developed exportersand more competition, too.

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