China 's Affect On The Global Economy Essay

914 Words Mar 3rd, 2016 4 Pages
The major topics surrounding the economic world has been the latest news concerning China. The media has been talking about how China’s current economic situation is affecting the global economy. A major question with this global problem is, what was the cause of the recent volatility? One of the reason for this ripple affect on to other markets and active disturbance has been caused by globalization. Currently, Xiao Gang, China’s security regulator has been fired. In 2013, Xiao Gang became the chief of the China Securities Regulatory Commission (CSRC). Under his tenure the Chinese stock market had soared to record highs in 2014, which fed into the market bubble. In 2015, the bubble burst and the Chinese market collapsed wiping out about $5 trillion in wealth. The collapse of the Chinese market has caused many problems for the other markets in the world.
In the article Fail to the chief, Xiao Gang was removed from office and China has appointed the new chief of the CSRC, Liu Shiyu. The collapse of the market and volatility in the exchange rate was blamed on Xiao. An example of the problems China is facing include, “the CSI-300 index of blue-chip shares has shed more than 40% of its value since last June’s peak. Yet even after the sell-off, small-cap shares still trade at nearly 90 times last year’s earnings, which suggests that the correction may have further to run.”2 Major reforms are taking place in the upcoming months and Liu Shiyu…

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