Getting nervous about the Chinese sharemarket

The global financial crisis was devastating for so many people, job losses, housing foreclosures and for many of us - a major hit to our retirement accounts. Australia was reasonably insulated due to Chinese demand for our resources and while we did experience some economic pressure, we avoided a recession. 

I'm not directly invested in the Chinese sharemarket, I don't have a broker buying and selling on my behalf on the Shanghai composite index. I, like many Australians have a superannuation fund that is invested in China but unlike many, I do have a self managed superannuation fund invested in Australian shares. I do understand what a volatile Chinese market will do to my retirement account and I'm nervous. 

2015 was a lousy year for Australian equities after 2012 - 2014 were a series of good years. Already the Chinese markets have been closed a number of times this year after the index fell 7% in a session, one day the market was only open for 14 minutes. I ask myself, will Australia be heading for a recession in 2016? 

China is slowing down, the government is targeting a 7% growth rate after previous double figure growth; commodity prices are down. The price of oil has declined, quantitative easing is finished and currencies remain under pressure. Our last recession was 1991 and although we had some downturns along the way, we remained reasonable unscathed. A number of international triggers could see the world economy decline severely and our economy will be under sustained pressure. 

From what I can tell, the Western Australian economy is already in recession, Queensland is another resource rich economy is under pressure. The South Australian and Tasmanian economies are perpetually in decline although New South Wales and Victoria have emerged from their slowdown in better shape than expected but could not weather the shocks of another international slowdown.