Worried About China? Keep Calm as Markets Return to Earth

Worried About China? Keep Calm as Markets Return to Earth. YaleGlobal. David Dapice. September 1, 2015.

A long anticipated slowdown in China’s growth prompted a downturn in stock prices and firm government interventions. The percentage of foreign investors in Chinese stocks are low, but the abrupt moves unnerved investors around the globe. Market prices fell in Europe, the United States, Japan and the many countries closely linked to China’s economy. China has long been regarded as the world’s engine of growth, and the volatility signals “a return to a more historically normal and realistic assessment of the risks in the real economy and to stock prices,” writes economist David Dapice. The global economy is not in balance. Many developing countries have relied far too heavily on increasing commodity sales to China. The United States has reverted to savings mode and can’t be counted on for rescue through consumption. Weakened currencies have not led to more growth for Europe, and that could lead to new rounds of currency manipulations and trade barriers from all. [Note: contains copyrighted material].

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