After China’s main stock exchange plunged by 8.5 per cent on 24 August, the Shanghai composite index’s worst single day fall in eight years, state media declared it “Black Monday”. Markets elsewhere in the world fared little better. Germany’s DAX index fell 4.7 per cent, pushing it into a bear market. The FTSE 100 also slid nearly 5 per cent, a tenth consecutive day of falls, and in the US the S&P 500 slipped 4 per cent, taking its losses since May to 11 per cent.

If traders – and anyone with a share portfolio or pension invested in shares – were not already nervous enough, the former US treasury secretary Larry Summers weighed in. “As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation,” he wrote on Twitter.

That remains to be seen, and the small bounce in share markets outside Asia on 25 August would have offered some reassurance. What is clear, however, is that more than seven years after the start of the global financial crisis, which ushered in the present period of austerity and deepening inequality, the world economy remains fragile.

One reason is its heavy dependence on China as an engine of growth. For years the world’s second-biggest economy has been sucking in raw materials from around the world to feed its factories and infrastructure projects: it is the world’s most voracious consumer of energy and buys about half of the world’s industrial metals, such as copper. But the days of 10 per cent or even 8 per cent growth in China are over. Even before the recent stock slide in Shanghai, which should not have been a big shock, given the steep rise in the market earlier this year, there were signs that the economy was slowing. Prices for commodities from iron ore and platinum to oil have slumped over the past year, partly because of supply issues but also because of weaker Chinese demand.

For countries dependent on revenues from raw materials, such as Venezuela, Ecuador and Nigeria, this is a challenge and raises concern about unrest. Even Saudi Arabia has been forced to borrow on the financial markets for the first time since 2007. Emerging-market currencies have plunged: it now costs more than 20 South African rand to buy a pound.

Rich western economies, which are left as the main drivers of global growth, appear to be more insulated from China’s troubles. But as our columnist Felix Martin points out, there are warning signs. The strong performance of US stocks in recent years is at odds with the underlying economic data. The strength of shares there and in the UK owes more to loose monetary policy: mainly low interest rates and quantitative easing, which involves printing money to buy back assets from banks and other institutions, in effect pumping cash into the financial system.

Yet cheap money is a shaky foundation on which to build genuine economic growth. And because interest rates are ­already so low, and debt and deficits high, governments have few tools to employ if investors’ confidence melts further and markets crash. Much worse may be to come.