The sharp multi-day selloff in Chinese stocks and slowdown in the world's second-largest economy have forced fears of a Chinese "hard landing" to the front and center of investors' minds.
Views are divided on the longer-term growth prospects for China, but in the short-term, a "hard landing"—a steep slump in economic growth or even a recession—has become some market participants' base-case scenario.
"We are not surprised, having been well-below consensus on China for some time. Indeed, the risk that our downside scenario materializes—that China's economy will suffer a hard landing—appears to have increased appreciably and is now close to being our baseline assumption," Clare Howarth, head of Asia-Pacific macro services at Oxford Economics, said in a research note this week.
"This would mean average GDP growth closer to 4 percent over the next five years rather than our baseline forecast of 5.8 percent."
China's official target is for 7 percent growth in 2015. Data out in July showed GDP growth beating expectations in the second quarter, rising 7 percent from the same period a year earlier. This spurred some analysts to say "I told you so"—and others to cry foul.
Looking beyond the official numbers gives clear evidence of a sharp slowdown in China, with sales of consumer goods such as cars and smartphones falling, as well as very weak trade data and slowing industrial production growth.
"The authorities are responding—but they have not so far announced the kind of massive stimulus package that followed the global financial crisis. If China is unable to prevent a continued rapid slowdown, the implications will be felt around the world," Howarth told CNBC.
A hard landing in China and shockwaves emanating from broader emerging markets represent "the biggest downside risks" to European equities, according to strategists at UBS.
UBS's current forecast for China implies a deceleration in growth from 7.4 percent in 2014 to 6.8 percent this year and 6.5 percent in 2016.
"While China is losing steam as a global engine of growth, it should not turn into a major disturbance for the world economy," UBS analysts led by economist Reinhard Cluse said in a research note this week, warning that "more negative scenarios have to be taken seriously."
He added that European equities were pricing in a further sharp slowdown in China and emerging market economies, leading to a mild recession in Europe in 2016 and a steep fall in U.S. growth rates.
"We suspect that this is too pessimistic a view," Cluse said.
The pan-European STOXX 600 is trading around 10.6 percent lower on the month, but has gained roughly 3.5 percent since the start of 2015.
The Shanghai Composite, meanwhile, is down over 20 percent since the start of August and 9.5 percent since the beginning of the year.
The recent wave of de-risking has been painful for markets, but for some longer-term investors, China's fundamentals do not indicate crisis.
"At this juncture, it is also helpful to remind ourselves that China is undergoing a major rebalancing of its economic makeup. As a residual of this process, it is clear to us that there will be certain growth headwinds," said Neuberger Berman's China equity fund manager, Frank Yao.
He forecast "more sustainable, quality-oriented growth" over the longer term.
"Against this backdrop, there has not been a material change to our views at the company-specific level," Yao added.
Similarly, chief investment officer at Franklin Templeton Investments, Michael Hasenstab, has retained his investment thesis for Asia following the major moves in markets.
"When we look at how much market panic there has been, one might be under the impression China is headed full speed into full-blown recession," he said.
"That is not our call. While we do expect moderation in China's growth, we continue to see it as healthy and an inevitable normalization for an economy of its size."