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Christine St Anne is Morningstar's online funds and ETFs editor.

There used to be a phrase that said: "When the US sneezes, the world catches a cold." Today, the phrase replaces "US" with "China". The global financial crisis certainly highlighted the crucial role China played in sustaining world growth.

Closer to home, China has had a huge impact on Australia's economy. As the US went into a recession, Australia's economy did not slide down with it. Rather, the economy was buoyed by the strong demand from China for Australia's commodities.

China now faces growth challenges, and with it, inflationary fears. Investors are now worried about a possible sneeze from the world's most important economy. A recent report from the BlackRock Investment Institute looked at the outlook for China and outlined both a bear's and a bull's case for the country.

The report says there is now a widespread belief among investors that China may be the world's most indispensible country. In fact, China has been one of the most important engines of global growth over the past 10 years (see figure 1).

Figure 1: China's contribution to world growth

Source: UBS.

China's population is twice the size of the US and the European Union combined. It has a fast-growing middle class and increasing industrialisation as its government continues to boost urbanisation programs.

A report from global consultant PricewaterhouseCoopers has found that by 2025, China could overtake the US as the world's largest economy.