Concerns growing over impact on global economy
The tumble in China's stock markets and the yuan's deprecation are not likely to trigger a global crisis, experts said over the weekend, citing the country's slower but still strong growth.
The benchmark Shanghai Composite Index tumbled by 11.54 percent during the past week, despite a series of supportive measures to prop up the market. Hong Kong's Hang Seng Index also fell by 6.6 percent last week.
In the US, the S&P 500 plunged by 5.8 percent for the week, marking its biggest weekly decline since September 2011.
In the global commodities markets, US crude oil prices plunged below $40 a barrel on Friday for the first time since 2009, when markets were still reeling from the global financial crisis.
On the London Metal Exchange, copper prices also hit a six-year low of below $5,000 per ton on Wednesday.
Rupert Murdoch, executive chairman of News Corp, warned Friday that the global economy could be on the edge of another crisis.
"All prices dropping, not just shares. Timely correction, or sign of major global crisis in near future?" he wrote on his Twitter account.
Yang Delong, chief strategist with China Southern Asset Management Co, said Sunday that the tumble in global capital markets is mainly due to concerns about slower global economic growth.
"Chinese investors still lack confidence due to the recent stock market volatility, while global investor sentiment has been dampened by China's economic slowdown and the yuan's depreciation," Yang told the Global Times.
A batch of Chinese economic data for July - including exports, industrial production and fixed-assets investment - was below market expectations.
On Friday, a preliminary reading for August of the Caixin/Markit purchasing managers' index (PMI) fell to a near six-and-a-half-year low of 47.1, further underscoring the persistent weakness of the economy.
Global investors have shifted their attention from Greece to China amid continued concerns about the Chinese economy, according to the BofA Merrill Lynch Fund Manager Survey for August, released Tuesday.
But Yang said the recent volatility in China's stock markets will not trigger a crisis, as the country's economy is still growing strongly, albeit at a slower rate.
"The risks from high leverage in China's A-share markets have been relieved in the past few months, when the benchmark Shanghai stock index fell from more than 5,000 points to around 3,500 points," he said.
"There are no new adverse conditions, and the market weakness is mainly due to fragile investor confidence," according to Yang.
Carlo Cottarelli, a senior IMF official, also said Saturday that China's economic slowdown and the fall in its stock market herald not a crisis but a necessary adjustment, Reuters reported Saturday.
"It's totally premature to speak of a crisis in China," he was quoted as saying at a press conference held in Italy, reiterating that the IMF's forecast for China's 2015 economic growth is 6.8 percent.
According to Zhang Yu, an analyst with Minsheng Securities, the Chinese government still has tools to stabilize economic growth.
"The financial sector that helped boost China's GDP in the first half of this year has slowed down, but infrastructure projects will play a bigger role in stabilizing growth in the second half," she told the Global Times Sunday.
