The Chinese economy has been getting a good deal of blame for helping to send global stock markets plummeting in recent sessions. But the concerns about China go beyond economic growth. HPR’s Bill Dorman has more in today’s Asia Minute.
It’s no secret that China’s economy has been slowing and its stock market has been staggering since June. So when analysts call those reasons for global market chaos, it makes you think there’s got to be more to the story.
Part of this is a matter of degree.
Friday, one measure of Chinese manufacturing dropped to its lowest level in more than six years. And that doesn’t just mean China’s economy is slowing. China has become a factory for the world, so that means a slowdown in global demand.
Another recent report echoes that trend. Chinese exports dropped more than 8% in July—pointing to weakness outside China—slowing demand from consumers and companies around the world.
China’s domestic economy also has troubles. It didn’t make global headlines last week, but China’s government news agency Xinhua reported the central bank took nearly 100-billion dollars from its foreign reserves. The central bank put that money into the China Development Bank and the Export-Import Bank of China to deepen their capital bases and support the broader economy.
On top of all of this, neither capital flows nor information flows in China are entirely transparent. For many, the government has a credibility issue when it says it’s still on track for growth of about 7% this year.
