Ripples from the nasty week on the Chinese share market have been felt worldwide.

Despite a recovery day, authorities are scrambling to control the chaos and the rout has raised serious questions about what it means for the strength of China's economy, which is so crucial to Australia.

Economic consultant Andrew Charlton, who was an advisor to former prime minister Kevin Rudd, spoke to 7.30 to explain what has been going on.

1. What is going on in the Chinese market?

The Chinese stock market had its biggest weekly fall in nearly 20 years this week. It fell 12 per cent over a 4-day period. It began on Monday as a result of data out indicating that the Chinese manufacturing sector has fallen for a 10th consecutive month and then it was exacerbated through the week by a decision by the Chinese Government to devalue the currency, indicating further weakness in the Chinese economy.

2. A number of China's problems are of its own making:

China is in a difficult situation because the Chinese authorities want to have their cake and eat it too. They want the benefits of a market economy but they're unwilling to accept the volatility which is inherent in that type of economy so they regularly intervene.

3. The Chinese economy is riddled with debts:

Local governments, state-owned enterprises, the property market all took on massive debts ... and they took on those debts at a time when the economy was growing at double-digit rates. Now they have to repay those debts at a time when the economy is growing by nearly half that.

4. China accounts for nearly 50 per cent of globally traded commodity demand:

That means that if you're a commodity exporter, you are in line for a recession. Canada is in recession, Brazil is in one of the worst recessions in its modern history. You would have to think that Australia is in that same firing line and already the Australian economy has printed 13 consecutive quarters of below-trend growth. The real question for us is: How long will this continue?

5. Is there more China pain ahead for Australia?