Investment Clock insights

China's equity bust is good news for global markets


Trevor Greetham

13 July  2015

Here’s my FT Markets Insight column on the website today. I argue that a weak China is good news for the world as it means lower commodity prices and relatively low interest rates. When people come to write the history of this period they will give a bigger role to China. The imbalances that led to the global financial crisis had a lot to do with China exporting deflation through manufactured goods prices and their FX intervention keeping bond yields too low, over-stimulating US and UK housing markets. The trigger for the bust was China’s growth turning inflationary through commodity prices, causing the Fed and others to burst the bubble. Continuing this line of argument, a weak deflationary China today is good news not bad news for the rest of us.

The value of your investment and the income from it is not guaranteed and can fall as well as rise. This article is for professional customers only. The views expressed are the author’s own and do not constitute investment advice

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