Chinese Stock Market Declines Indicative of Larger Problems

Chinese stock markets have decline by more than 20 percent so far in 2016 since the latest peak in June 2015. Although these fluctuations may not impact the Chinese economy, the declines are a sideshow to bigger problems in debt markets. China’s acclimation of debt is very high compared to other emerging markets. These levels are historically associated with bank crises, and for this reason, Euromonitor has assigned a 30 percent probability over a one year horizon to a major downturn or a more severe hard landing in China.

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