The front page of The Wall Street Journal Asia is covered by an attached advertisement and booklet for Glenlivet Whiskey. The timing for the placement couldn’t be better. Underneath the liquor ad is another story about Greece, the death of the Euro and the fall across global equity markets.

“Do not trust the horse, Trojans. Whatever it is, I fear the Greeks even when they bring gifts.” From Aeneid, Book 2, by Virgil (written 19 BC)

What does the collapse of the Greek economy mean for China?

Trade for China with Greece isn’t significant. According to the…wait for it…“Economic and Commercial Counsellor’s Office of Embassy of the People’s Republic of China in the Hellenic Republic” trade as of a few years ago was on the upswing:

“Sino-Greek trade volume has risen from US$500 million in 2000 to US$2.02 billion in 2005. There has also been an impressive boom of mutually beneficial cooperation in the service sector. Greek ships transported half of the US$1.4 trillion worth of China’s import and export goods in 2005.  (Source: China Embassy in Greece.)

That same year the US imported $243 billion from China. Greek accounted for 1% of that amount. Decreasing trade with Greece won’t overtly damage China Inc.

Yet in this case the slump in trade is the Trojan Horse, and inside is a Pandora’s Box of apprehension, uncertainty, fear and doubt. In case you missed it in that jumble of metaphors, the collapse of Greece is leading to a slowdown in a number of European economies. That in turn affects confidence in the Americas. That comes together to bring down China’s growth rates.

For those stuck in the mud in Japan’s economy – where 1% growth rate in the first half of 2012 was called a rebound – the decline in China is negligible. Forecasters predict China’s growth rate will decrease from 8.4% per year to 8.2%. That’s enough to set alarm bells ringing.

Yesterday The World Bank issued a report on growth rates across East Asia. To the casual reader, this all seems like great news. Trade is up, poverty is down. There’s even a snappy video with highlights:

Yet like Oracles of old, the newspaper editors have thrown the chicken bones and don’t like what they see:

“Beijing Urged to Cushion Euro Blow”

Front page of The South China Morning Post

The drop in growth by 0.2% is causing alarm that the nation’s economy is contracting. China’s politicians are urging people to “prepare for rainy days,” as Premier Wen Jiabao said the central government should do. Growth will be a bigger priority and most economists expect a return to a range of policy measures, from fiscal and monetary easing to direct stimulus.

Again – what’s the impact of Greece?

In chaos theory, The Butterfly Effect proposes that small changes in one part of a system can cause dramatic changes in another part. One small move leads to many more moves. In an effort to restore equilibrium vast changes may occur.

The name “Butterfly Effect” is from the hypothetical example of a butterfly beating its wings in South America leading to a typhoon in Asia. Small wind currents lead to larger then larger then larger changes.

In Greece, a government employee has her wage reduced 30%. That leads her to putting off the purchase of new clothes. That causes a small boutique to lose sales and close. The distributor has one less customer and finally goes out of business. That leads to cancellation of contracts at factories in China. Soon those garment workers aren’t as busy and some are laid off.

To the world, Greece has provided a gift. Hundreds of thousands of butterflies have been released on the global economy. And the tiny beats of millions of wings are generating an economic typhoon that is heading straight to China. How prepared is the economy for that storm? Everyone is watching.

Beware of Greeks bearing gifts. Even if they’re butterflies.