Financial markets are focusing on China’s moderating economic growth and on its ability to manage compositional changes of its aggregate demand and alleged excesses in some sectors that may have benefited from administered credit flows.
Beijing’s assurances that these problems are being addressed are registered, but markets continue to doubt positive policy outcomes, despite indicators showing that policies are moving activity and structural changes in the right direction. These doubts persist even after a 60 percent increase of Chinese equity prices in the course of last year.
Broader market trends in Asia are also missed because this fastest growing segment of the world economy – and by far the world’s largest capital exporter – is incorrectly seen as being entirely dominated by external economic and financial events.
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