Well, it didn’t take very long for the New Year to turn ugly for the markets.India is supposed to be an exception among the emerging markets, right? It is the one with the highest gross domestic product (GDP) growth, its currency is resilient thanks to an improving current account balance, it benefits hugely from low oil and commodity prices and to top it all, it’s relatively insulated from the Chinese contagion, right? Well, Monday’s markets proved all those things are, plainly speaking, just wishful thinking. It’s now absolutely clear that if China sneezes, markets catch a cold. All we can hope is it’s not pneumonia.Monday was yet another stark reminder of how important China is for global markets. Chinese markets were halted after they fell 7%, reflecting investor fears about overcapacity and weak demand in that country’s factory sector but the reverberations were felt across the world. Stock markets from Japan to Germany saw a rout and currencies tumbled.What’s the worry? The main concern from a Chinese slowdown is of course the impact on commodities, which have already been weak for a year and a half now, contributing to a wave of deflation sweeping over the globe. Prices of industrial metals such as aluminium and copper fell by as much as 2% on Monday. Crude oil and gold were blessed exceptions but owing to entirely different reasons. Oil prices jumped 1.45% as Saudi Arabia severed diplomatic ties with Iran, but rising tension in the Middle East contributed its bit to the stock rout as well. Gold prices rose 1.22% but that is probably because of the metal’s role as a safe haven investment when risk appetite diminishes. But the main worry finds expression in the question that investors are now increasingly asking of authorities in many countries: do they really have things under control? In China’s case, the problem is compounded by the bursting of a massive investment bubble and a tricky transition to a consumption-oriented economy that is far from easy to manage. Small wonder the market succumbs to bouts of deep funk every once in a while.India wasn’t immune to the meltdown in China. Local stocks fell 2% and the currency too depreciated two-thirds of one per cent against the US dollar. This has happened despite India being a darling of fund managers, despite being a domestic consumption-oriented economy that is not too dependent on foreign trade and despite all the talk about reforms.But the fall in stocks and the rupee should come as no surprise. When Chinese stocks last had a meltdown in August, local equities were hit then as well. More than the US Fed hiking rates again, the risk from China will very likely hang over the markets like a Damocles’ sword in 2016.