Chinese economy at tipping point

Sep 30, 2015, 08:30 am

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By Hong Soon-do, Beijing correspondent, AsiaToday - China's economy is not showing signs of recovery after being shaky this summer. It seems like China is at a tipping point between economic crisis and recovery.

The customer lounge of a stock trading firm in Shanghai. Recently, Shanghai share prices have lost almost 40% of their value since mid-June, raising fears for China's economy./ Source from Beijing News

According to well-informed sources in Beijing on Tuesday, such assertion is not an exaggeration looking at several circumstances and economic indicators. Most of all, China's cash shortage is roiling markets. In fact, Chinese companies are on the hunt for funding.

China's economic bubble that is not removed yet is making the situation worse. As economic experts say, China is currently in the midst of a triple bubble: the stock market, real-estate, and credit market.

China's industrial overcapacity problems remain severe as well. In sectors such as iron and steel, and glass, overcapacity is not new in China.

Moreover, the preliminary Caixin China Manufacturing Purchasing Manger's Index (PMI), a gauge of Chinese manufacturing activity, fell to a six-and-a-half-year low of 47.0 in September, compared with a final reading of 47.3 in August. A reading above 50 indicates expanding activity while one below signals contraction. It means the day when China's economy can recover is still far-off. This is why the Chinese authorities look tempted to devaluate the yuan despite global concerns.

Of course, China's economic hard landing is unlikely to lead to global economic catastrophe. However, things could get difficult if the China's economic slump continues. It's clear that Chinese economy should gain momentum soon.

#Chinese economy #Caixin China Manufacturing Purchasing Mangers Index #bubble #industrial overcapacity 
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