Shanghai (AsiaNews) - Chinese stocks continue to fall, despite a further cut in interest rates by the People’s Bank of China yesterday, reducing rates from 0.25 to 4.6. This is the fifth rate cut since last November.
The Shanghai Stock Exchange this morning was down 1.1%; this week it had already fallen by 16%, creating upheaval across Southeast Asia, India, Africa, Europe and America.
A crisis in the Chinese market was long overdue. In 2008, when the world was drowned in the so-called "subprime crisis", Beijing tried to counter it with a lightweight fiscal policy and a massive loan of money that created financial and real estate bubbles a. The national debt has reached more than 250% of gross domestic product, creating a drag on growth. Added to this is the drop in foreign demand - due to the global crisis - which has generated overproduction and stagnation of exports and domestic consumption. Two weeks ago the central bank devalued the yuan, hoping to boost exports, but the data of industrial production remain very low.
According to several analysts, the Chinese crisis further underlines that the world is still floundering in the midst of an economic crisis and the importance of the Chinese giant. It is almost certain that China’s fall will cause major difficulties in other countries such as Brazil, the US and oil nations, all major exporters to China.
Some claim the “blame” for the current crisis lies with China, the US Federal Reserve and the drop in oil prices. However, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, told China Business News that the real responsibility for this crisis lies with the Fed and its programs to increase interest rates, which have led to a currency devaluation and a flight of capital. But others point out that the entire global market seems to be suffering and because economies are bound together this shows that the market crisis is everyone’s crisis.