China’s economy is losing momentum. What is happening and why does it matter for Australia?

China, the world's second-biggest economy, is in a rocky economic period marked by rolling Covid clampdowns.

The timing is awkward, given China is in the run-up to the 20th National Congress of the Communist party in November, which is expected to extend president Xi Jinping's grip on power.

But the issues go beyond the pandemic and notably include a deflating property bubble. Here we break down China's economic outlook - and what it means for Australia and other countries.

The International Monetary Fund (IMF) last month cut its forecast for China's 2022 GDP growth by a quarter to 3.3%. That would be the slowest pace in four decades - excluding 2020's Covid crisis dip - and below the government's 5.5% target.

In July, almost all the data, from retail sales and manufacturing to investments, missed expectations, says Raymond Yeung, ANZ's chief economist for greater China.

"My biggest worry is employment," he says, pointing to the 20% youth unemployment in cities, the highest on record.

Lockdowns to enforce China's zero-Covid policy aren't just denting current growth, Yeung said. Future consumption would also be cut, while more young people out of work weakens a prop for China's property market.