Beijing, Aug 25 (IANS) China’s economy is passing through “a bitter period of structural adjustments”, said a state-run daily after Chinese stock markets saw their biggest fall since 2007 on Monday.
An editorial “Morale needed as pessimism roils market” in the Global Times on Tuesday said the Shanghai Composite Index dropped 8.49 percent and 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’,” the daily said.
The editorial said that there seems to be only one reason for the tumble – “investors lack confidence in China’s economic outlook”.
“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,” it said.
“… such a big trend will not be swayed by some unusual short-term jitters in the stock markets or exchange markets,” the editorial said.
“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,” it added.
Economic observers 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.
The editorial noted that 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,” it said.
The daily went on to say that most of the investors focus on short-term gains. “…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.”
Global Times asked: “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.”
The daily said that there is no need to worry because of pessimistic voices from the outside world.