China has reached point of no return

Beijing guided the unit down by setting its daily fix lower for eight consecutive sessions, representing a 1.4 percent fall, before returning to stability.

China has been transforming from an export- and investment-powered model to one based on stronger consumer spending, innovation and the service sector.

China’s economy grew 6.9 percent in 2015, the slowest rate since 1990, the government said on Tuesday.

Chinese tourists have grabbed global attention for their frenzied shopping overseas in recent years, bringing home goods from designer outfits to quality life necessities, electric cookers for instance.

“Today under the “new normal” entrepreneurs should have a longer term point of view…”

The Fund said the outlook for an acceleration of US output was dimming as dollar strength weighs on manufacturing and lower oil prices curtail energy investment. Maybe what we are seeing is a delayed reaction to the slowdown in the world economy, a slowdown that has now gone on for a few years.

“Markets are just very uncertain about the slowdown in the Chinese economy”, Stephen Koukoulas, chief strategist TD Securities, told the BBC. And, with a $10-trillion economy, even 6.9 per cent growth added $690 billion in new value in 2015.

“It is really good for our business and our employees in the US They are going to commit to keeping the headquarters in Louisville, Kentucky, maintaining employment levels”. That scenario affects a lot of other countries, particularly Australia, as China is Australia’s largest trading partner.

After share prices tanked for the second time in a few days in early January, the director of the Mercator Institute for China Studies in Berlin, Sebastian Heilmann, said in a flash analysis: “The Chinese government’s competence to manage the economy has taken a hard knock, notably also at home, because of the stock market crashes people have kept on seeing”. For the October-December quarter, growth inched down to 6.8 percent, the weakest quarterly expansion in six years.

Equities on both sides of the Atlantic rebounded after European Central Bank president Mario Draghi as well as China’s Vice President Li Yuanchao flagged a readiness to support economic growth and financial markets.

In itself, a significant move in the yuan against the dollar, if not accompanied by a growth shock in China or higher financial stress globally, would have only a minor impact on world growth and inflation. Yet, this is not the most important cause of China’s slowdown. Services made up 50.5 percent of the Chinese economy last year, up from 48.1 percent the year before. But the credibility of China’s economic statistics itself is widely doubted, with some experts suggesting that its economic growth may in fact be around 5 percent. “There is underlying growth in China”, Rajan said, adding that the country’s policymakers are making prudent decisions regarding its currency and its relationship to the currencies of other trading partners. What’s worse, a financial storm has broken out this month with the MSCI emerging markets index falling more than in the corresponding period in the crisis years of 1998 and 2009.

All of this should sound at least vaguely familiar if you know anything about the US economy.