Population Youth / The Chinese Roller-coaster Explained

The Chinese Roller-coaster Explained

The Chinese stock market has taken a tumble in the last few weeks and has been down nearly 40% since mid-June. This has caused panic in global financial markets.

However, this has to be given some context. Chinese stocks have nearly trebled in the last year (up to June 2015). A fall of 40% does not seem so bad in light of this. What is also important is that the majority of developed countries have a stock market that is a good indicator of the state of the economy. Whereas the Chinese stock market is highly influenced and controlled by their government and does not really give a clear picture of how the country is doing.

There are other important economic indicators that give us a better idea of how the Chinese economy is doing, such as manufacturing and exports. Both of these have slowed down in the last year, so much so that economists believe that China’s annual growth rate is more like 2-3%, rather than the 7% claim.

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