China’s new normal freaks out financial markets

In just seven days, one went from a systematic playing down of China’s economic and financial environment to a realization as unanimous as quick according to which this environment strongly deteriorated and translated a worrying instability for both China and world economic growth. Chinese industrial PMI reached only 47.3 in August 2015, a figure under 50 meaning activity has decreased.

The same is true about China’s economic growth that Goldman Sachs lowered by around 0.4 percentage point and now forecasts it at 6.4% in 2016, 6.1% in 2017 and 5.8% in 2018, far from the expert’s pivot level at 7%. The IMF confirmed the review at the world level without however joining the suddenly noxious ambiance on the financial markets. It needed thousands of Chinese stocks reaching their daily bear limit of 10% so that many people come down to earth. Like the Alibaba stock that tumbled from $120 to $65 in just 10 months, very high, very quick doesn’t mean stability for financial China.