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China should avoid financial meltdown

Discussion in 'Market News' started by Lily, Oct 16, 2015.

  1. Lily

    Lily Forum Member

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    The Chinese government’s economic management seems less incompetent than it did a few months ago

    One question has dominated the International Monetary Fund’s annual meeting this year in Peru: will China’s economic downturn trigger a new financial crisis just as the world is putting the last one to bed? But the assumption underlying that question – that China is now the global economy’s weakest link – is highly suspect.

    China certainly experienced a turbulent summer, owing to three factors: economic weakness, financial panic, and the policy response to these problems. While none on its own would have threatened the world economy, the danger stemmed from a self-reinforcing interaction among them: weak economic data leads to financial turmoil, which induces policy blunders that in turn fuel more financial panic, economic weakness, and policy mistakes.

    Related: The Chinese economy is slowing down and there can be no denying it

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