[Summary]
China’s meltdown shows the country is out of control
Lei Mao )
(9/16 Update2)Abstract
On Black Monday, China chose the old model to stabilize
the economy; however this is not a clever choice in regard to a long term finance strategy.
My summary
China's meltdown may trigger a
financial crisis that threatens the global economy. Earlier this month, the People Bank
of China devalued renminbi which hid the crisis of a potential liquidity
problem. Recently, Black Monday broke out the hidden crisis forcing the PBOC to cut interest
rates by 0.25%. It symbolized that China economy was stagnating and weak,
and forced China back to cheap exports, the old broken growth model. Furthermore, it also postpones the Chinese
Dream policy about rebalancing the economy from richer eastern regions to
poorer western regions.
As world’s second largest economy, tremendous
investments have adhered to for many years, China economy has entered the extreme
demand, during this period, a recession and the social unrest arouse easily.
In this background, the old model is viewed as a short-term tactic to stabilize
economic growth.
However, it is not a permanent solution and will cause state-owned
enterprises to squeeze out private investment by using their power to retard certain aspects
of economy development.
Alibaba, the
biggest online shopping portal in China revolutionized the way of people shop.
But recently, China banks intervened in the online payment system through
tighter regulation, forcing all business to be done through
a specific bank. This restricts the future
development of Alibaba and the online transactions market and gravely unbalances the
business in western regions . If China does not reform to provide a friendly
environment for private enterprises, it faces a descending economy.
(9/10 Update1)Abstract
On Black Monday, China chose the old model to stable the
economy, but it is not the clever choice for long term finance.
My summary
China's meltdown may trigger a
financial crisis that may threaten global economy. Earlier this month,
the People Bank of China devalued renminbi which hid the crisis of a
potential liquidity problem. Recently, Black Monday broke out the hidden
crisis forced the PBOC cut interest rates by 0.25%. It symbolized that
China economy was stagnating and weak, and forced China back to cheap exports,
the old broken growth model. Furthermore,
it also postpones the Chinese Dream policy about rebalancing the economy from richer
eastern regions to poorer western regions.
As world’s second largest economy,
which has relied on tremendous investments for many years, China economy grows tardily
to avoid a recession that would arouse social unrest. In this background,
old model is viewed as a short-term tactic to stabilize economy growth.
However, it is not a permanent solution and will educe that state-owned
enterprises squeeze out private investment by their power to retard certain
aspects of economy development.
Alibaba, the
biggest online shopping portal in China revolutionized the way of people shop.
But recently, China banks intervened in the online payment system through
tighter regulation, all business has to be done through specific bank. It
restricts the future development of Alibaba and the online transactions market
and unbalances the business in western regions gravely. If China does not
reform to provide a friendly environment for private enterprises, it merely
faces a descending economy.
Abstract
In the Black Monday, China choose the old model to stable
the economy, but it is not the clever choice for the for long term finance.
My summary
China's meltdown may trigger the financial crisis that may effect on glob's economy. In earlier this month, the People Bank of China devaluated renminbi which hidden the crisis of a potential liquidity problem. Recently, Black Monday broke out the hidden crisis forced the PBofC cut interest rates by 0.25%. It symbolized that China economy was stagnation and weaker, furthermore it forced China back to the cheap experts, the old broken growth model. Besides, it also postpones Chinese Dream policy about rebalances the economy from poorer western regions to richer eastern regions.
As a second large economical country which relays on tremendous investment for many years, China is considered the soft-landing because the government is afraid of social unrest. That's why it has returned to its old model as a short-term to fix GDP growth. However, the old model is not
a permanent solution because state-owned enterprises squeezes the room of private investment by their hiding power.
Alibaba is the biggest online shopping portal in China and it revolution the custom of people shopping. But recently, China banks intervene the online payment system through tighter regulation, all business has to be do through SOE bank. It restricts the development of Alibaba and online transactions market and unbalance the business in western regions gravely. If China does not reform to provide the friendly environment for private enterprises, it merely faces the descending economy.
Original article:
http://fortune.com/2015/08/26/china-stock-market-black-monday/
Best regards.
Paguma
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Words in This Story:
meltdown n.: a complete failure, especially in financial matters.
stimulate v.: to encourage something to grow, develop, or become active.
devaluation n.: to reduce the rate at which money can be exchanged for foreign money.
renminbi n.: the currency of the People's Republic of China.
reserve v.: to keep something for a particular purpose or time.
plummet v.: to fall very quickly and suddenly.
unrest n.: disagreements or fighting between different groups of people.
unrest n.: disagreements or fighting between different groups of people.
prop v.: to support something physically, often by leaning it against something else or putting something under it.
organic growth n.: If a company experiences organic growth, it develops its own business instead of buying other companies.
transaction n. :to do and complete a business activity.
enhance v.: to improve the quality, amount, or strength of something.
hierarchy n.: a system in which people or things are arranged according to their importance.
distinct a.: clearly separate and different (from something else).
woe n.: big problems or troubles.
surplus n.: the amount of money you have left when you sell more than you buy, or spend less than you own.
quantitative a.: relating to numbers or amounts.
stagnation n.: to stay the same and not grow or develop.
organic growth n.: If a company experiences organic growth, it develops its own business instead of buying other companies.
transaction n. :to do and complete a business activity.
enhance v.: to improve the quality, amount, or strength of something.
hierarchy n.: a system in which people or things are arranged according to their importance.
distinct a.: clearly separate and different (from something else).
woe n.: big problems or troubles.
surplus n.: the amount of money you have left when you sell more than you buy, or spend less than you own.
quantitative a.: relating to numbers or amounts.
stagnation n.: to stay the same and not grow or develop.
