Morale needed as pessimism roils market

Source:Global Times Published: 2015-8-25 1:13:01

Chinese stock markets saw their biggest daily fall since 2007 Monday, with the Shanghai Composite Index dropping 8.49 percent, while the ChiNext Index plunged 8.08 percent. Other Asian markets experienced a dramatic fall along with them. US stock markets also plunged to daily limit in early Monday following the big drop in Chinese stocks. Some have therefore dubbed the day "Black Monday."

There seems to be only one reason for the tumble - investors lack confidence in China's economic outlook. Not long ago, China's reform of its currency's exchange rate led to a continuing yuan's devaluation, which seems to have provided more proof that the nation's economy is over the hill. The newly released economic figures do not look good. It seems that the words "misfortunes never come alone" have come true.

Economic observers generally believe that if investor confidence is low for a long time, it will be normal to see drastic fluctuations as stocks and exchange markets react strongly to specific reasons.

It is complicated to evaluate China's economy. For example, how to confirm the coordinates and parameters of such an evaluation is not easy. China has bid goodbye to double-digit economic growth, and has entered the "new normal" of growth on a medium-to-high level. But compared with the other major economies in the world, China's performance is still one of the best. Unfortunately, this reality cannot necessarily convince investors.

Most of the investors focus on short-term gains. This herd mentality is not only present in the markets. China' reform is positive in producing favorable results in the long term, while its short-term interests are relatively limited at the moment. 

However, the vast majority of investors tend to put their immediate interests in first place. 

Will China's economy come to a terminal after this time? Could the economy be sluggish for a long period, or even go downhill? 

It could be certain that few believe this. If the country's economy is so lame, and bound to tumble in the future, the whole 21st century will be another story, and a majority of today's strategic planning could be scrapped.

There is no need to worry because of pessimistic voices from the outside world. China's economy is in a bitter period of structural adjustments. We should become inured to face all sorts of problems with grace. This temporary lack of confidence will not snowball to become destructive.  

The country's economy is made of  more than statistics. Chinese people are pursuing better infrastructure construction, more abundant materials and more preferable services. This is the biggest driving force of a nation's economy, and it is still a burning desire. 

The overall living environment of China will be renovated in the coming decades, and such a big trend will not be swayed by some unusual short-term jitters in the stock markets or exchange markets.


Posted in: Editorial

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