China Archives - Page 15 of 54

China Investors Begin De-Risking

Chinese small-cap stocks saw an aggressive sell-off Monday as investors in the country look to avoid putting their capital at risk.

The Shanghai composite index rose 2.4% on Monday after spiking over 8% in early morning trading, but was one of just a handful of Chinese stock indices to see gains on Monday.

Small cap stocks in China fell over 3.6% on Monday, leading the declines of several other stock markets throughout the country.

Other stock indices have suffered similar declines, with the Shenzhen and ChiNext indices also posting losses.

China’s Adjustment to a Consumption-Led Economy Will Take Time

China’s old model of growth produced the strongest, most resource-intensive economic growth the world has ever seen. However, the period in which China’s growth dominated world demand for energy and metals and lifted global commodities prices to unprecedented levels has ended. This is most decisive for commodities like coal, for which production or use has large negative effects on local and global environmental amenity.

Forecasting China’s Future

Forecasts of China’s future run the gamut. I do not endorse either extreme. There is no significant chance that in the foreseeable future the Communist government will follow the fate of the Soviet Union. Nor do I share the view that the People’s Republic of China is becoming so powerful that it will dominate the world.

China Encourages Debt as Manufacturing Shrinks

Chinese economic activity continues to decline as the government encourages borrowing money to fuel growth.

According to the HSBC flash Purchasing Managers’ Index (PMI), manufacturing activity shrunk again in June, with a reading of 49.6. Some pundits are cheering the fact that the reading is up from May, when the reading was 49.2, and beat expectations by 0.2 points, but several economists are still warning that the contractionary trend remains intact and is indicating that Chinese growth is likely to fall short of its target for the year.

The Underpinnings of the China Equity Market’s Meteoric Rise

Not so long ago, China’s A-share index lingered around 2,000. Before last week’s plunge, it closed at 5,200. In the short-term, the market will remain volatile, but just as China’s economy has not emulated typical market fluctuations, its potential should prevail in the long term.

Recently, the value of Chinese stocks climbed over $10 trillion for the first time, according to Bloomberg’s data. That translates to a gain of $6.7 trillion in 12 months. That is more than Japan’s entire stock market and about 40% of the U.S. market.

The Experimental Economy of China

China’s economy has always played a very unique role in challenging the global markets. China’s approach to establish two of its own banks, namely BRICS led National Development Bank and Asian Infrastructure Investment Bank (better known as AIIB) has made it evident that it wanted to rely less on the western world and wanted other Asian economies to join in. With the establishment of BRICS, China aimed to reverse the power play game of developed nations like US and Japan.

China’s Economy Shows More Signs of Contraction

China’s imports fell for the seventh month, including a shortfall in exports. Experts expected a 10-percent fall in imports, but imports dropped 17.6 percent year-on-year.

Are Crash Theorists in the West Using China as a Scapegoat?

For a quarter of a century, China’s economic crash theory has been a lucrative cottage industry in the West. However, there is a reason why certain times favor the doomsayers. At the turn of the millennium, Gordon Chang’s The Coming Collapse of China (2001) exemplified the economic crash theory. In reality, that is when China became a member of the World Trade Organization and growth soared to double digits until the West’s financial crisis in 2008-09. Therefore, any investor who took the theory seriously lost big time.

Is Chinese Production Too Efficient for Global Economy?

China’s economy grew on the back of its impressive manufacturing capabilities. Just over a decade ago, as China sought ways to expand its economy, it turned to manufacturing and exporting, and the investment paid off. For years, Chinese economic growth has been among the best in the world, and China now has one of the most influential economies on the Planet thanks to its highly efficient production facilities, abundant human capital, and low price points for its finished goods.

China Stocks Surge, Extend Rally

Chinese stocks rose on Monday despite growing fears in the west that an unsustainable equity bubble is ripe to burst in the largest Asian economy. China’s Shanghai Composite Index rose 1.75% by late afternoon trading, extending the index’s rally. In the last twelve months, the index has risen nearly 138%, or 44% year-to-date.

Illiterate Investors