Churning over China: Anatomy of a Slowdown

July 18, 2016 8:30 AM

China’s economic opaqueness, including doubts about the veracity of official figures, is one the biggest blind spots for policymakers and businesses around the world trying to plan for a highly unpredictable future.

It's a little like trying to pilot a giant aircraft while a key gauge on the dashboard looks jammed.

This has brought increasing attention to the pronouncements of China’s economic authorities, as well as the performance of its once-isolated stock market.

The following timeline of developments since last summer’s equity market crash should be a handy tool for those trying to figure out what’s next. Is the economy stable, despite the slowdown in growth to its weakest levels in a quarter century, or is there further to fall? Will the country’s corporate debt create trouble for the banking system? Does a weaker economy mean recent momentum toward market reforms, including currency liberalization, is waning? 

Turbulent Year

Early 2015Concerns about a stock bubble mount as the Chinese stock market climbs 37 percent in the first three months of the year.

June 12, 2015Surging 59.7 percent in less than six months, the Shanghai Composite Index reaches its historical peak.

July 8, 2015 – China bans stock sales by major shareholders for six months.

August 11, 2015 – China surprises global markets with a currency devaluation.

August 26, 2015 – The value of Chinese stocks plummets 43 percent compared to its June peak.

September 7, 2015 China’s currency reserves post a record monthly drop as turmoil forces intervention to prevent a disorderly decline in the yuan.

January 6, 2016China halts stock market trading after a 7 percent slump triggers circuit breakers in one of several such episodes.

February 20, 2016 China fires stock market regulator after market rout.

March 2016 –China releases its five-year plan, targeting 6.5 percent growth through 2020.

April 15, 2016China’s quarterly GDP growth slows to 6.7 percent, confirming earlier signs that the economy is cooling.

June 12, 2016 – The International Monetary Fund sounds warning on China's corporate debt.

June 14, 2016 – MSCI rejects China from its emerging markets index.

Early July –  The Chinese yuan falls sharply in the aftermath of the Brexit vote.

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