There’s one really big problem with China’s 1.3 billion customers: They don’t spend enough. Even as China’s economy has soared, the share of output coming from consumption has nosedived. Over the last decade or so, that’s sapped many trillions of dollars from the global economy.
China’s epic stock market boom—and impending bust—is like déjà vu all over again. The stock rally that began last year bears a striking resemblance to the credit-fueled American stock bonanza of the late 1920s. It also, however, has much in common with the Japanese market frenzy in the twilight of the 1980s. The uncanny similarities of both episodes also hint at what might await China when its market finally returns to reality.
The Chinese government just announced that it will suspend stock trading on Sept. 3 and 4, according to the Shanghai Stock Exchange (h/t South China Morning Post’s George Chen) The official reason, as mandated by the securities regulator, is to commemorate the Japanese surrender (link in Chinese) that ended World War II.
This post has been corrected.
Defying all expectations, China’s GDP grew 7% in the second quarter—at least according to the official charade.
Desperate times call for desperate measures. And after some $3.4 trillion in value was wiped off the Shanghai and Shenzhen stock markets in three weeks, the Chinese government was very clearly desperate. Fortunately, the rescue it launched this week—including stepping up state investment in stocks and pressuring lenders to roll over margin loans—seems to have worked. The Shanghai Composite benchmark index closed out the week up 11% from its Wednesday (July 8) nadir.
Avril Lavigne is the latest celebrity to reveal being felled by Lyme disease. After months of withering fatigue, the Canadian singer-songwriter was finally diagnosed with the tick-borne illness and now expects a full recovery. Those who take longer to be diagnosed are often less fortunate. Best-selling author Amy Tan’s battle with Lyme left her with 16 brain lesions, epilepsy and, if she misses her course of antibiotics, the inability to recall what she just read. Punk icon Kathleen Hanna’s struggle with the disease all but ended her career.
China’s market downfall has been dramatic and painful for the investors involved. But so far there has been little immediate impact on the rest of the world, because China tightly limits foreign investment in mainland stocks.
The Shanghai Composite Index fell 1.3% on July 7, days after the Chinese government vowed to prop the benchmark index up. It has a lot farther to fall, says Victor Shih, professor at University of California, San Diego.
“We must deepen economic system reform by centering on the decisive role of the market in allocating resources….” — President Xi Jinping, “The Decision” of the Third Plenum, Nov. 2013
California is now officially anti-anti-vaxxer. Today, governor Jerry Brown signed a strict new law requiring almost all parents to vaccinate their children before they can attend daycare, public school, or private school, regardless of their religious or personal beliefs.
The human urge to recreate the world of dinosaurs never really gets old—Jurassic World‘s blockbusting is but the latest proof. Though the movie takes some liberties in imagining its dinosaurs, nature is hardly less creative. Recent discoveries include a long-nosed Tyrannosaur, a cat-sized microraptor, a four-winged flying dinosaur, the “chicken from hell,” and, as one scientist put it, a “colossal, slow-moving, horse-headed, hump-backed dinosaur that looks like something out of a bad sci-fi movie.”
After a brutally dark winter, Swedes like to celebrate their near-endless summer days with a dip in the country’s many lakes—often accompanied by another cultural fave: alcohol. It can be a grim combo. Three out of five deaths occur after drinking, according to the Swedish Lifesaving Society (pdf, p.2). Last year, 137 Swedes drowned, more than those killed in traffic accidents.
China’s stock market has taken a turn for the ursine. Today’s 3.3% tumble left the Shanghai Composite Index down 21.5% since its June 12 peak—official bear market territory, as we reported earlier.
California just got closer to making itself officially anti- anti-vaxxer. Earlier today (June 25), the state assembly passed a strict new law requiring parents to vaccinate their children regardless of religious or personal belief. Having approved an earlier draft, the state senate will likely soon send the bill to the governor to sign, the Los Angeles Times reports.
Planning to cool off this summer by hitting the pool? You might want to pack your goggles to prevent your eyes from turning bloodshot, from… No, not chlorine.
China is cranking up its credit machine once again. The country’s State Council announced plans to remove a lending cap that has long barred banks from lending more than 75% of their deposits.
It’s a common these days to hear that Chinese stock markets are “divorced from reality.” As 2015 has worn on, the economy seems to have slipped into ever more dire straits. China’s stocks, meanwhile, have consciously uncoupled so aggressively from that “reality” that the Shanghai Composite index is up nearly 40% this year—even after its recent precipitous slump.
Terrifying creatures rove the sea’s black depths. But apparently, so do adorable ones. Like the tiny, big-eyed octopus in the clip above, which many liken to the ghosts in Pac-Man.
Look out below, Alaska. Fang-mawed, foot-long fish have been falling from the skies above the town of Fairbanks. So far, residents have found four of these eel-like sea creatures on a front lawn, a Value Village parking lot, and other random places—all far from any water.
Sir Richard Branson is making things a little less stressful for some of Virgin’s new parents. The billionaire investor and Virgin Group founder is granting a full year of 100% paid parental leave to the 140 employees working in London and Geneva for Virgin Management, the conglomerate’s investment and licensing arm (provided they’ve worked there for more than four years). And yes, that means dads are covered, too.
Earlier today (June 9), Jack Ma, founder and chairman of Alibaba, addressed a Waldorf Astoria grand ballroom’s worth of well-to-do New Yorkers. His lunchtime speech wasn’t the tech fantasia of “digital revolutions” and “innovation” you might expect from a world-famous internet mogul. In fact, the populist tinge of Ma’s remarks matched a very different (but just as distinctive) rhetorical genre: the American presidential stump speech.
Look what a guy fishing on the Penghu Islands, Taiwan, just hauled up from the ocean’s depths. Nope, that’s not a strand of radioactive algal sea-goop. It’s likely Lineus fuscoviridis Takakura—a venomous, carnivorous creature that comes from the phylum nemertea (a.k.a. ribbon worms). The guy who filmed it, Jian Weicheng, uploaded it to his Facebook page (link in Chinese) with the comment, “At first, I thought it was a sea hyacinth—but what is this?!?!”
China’s recent explosion of foreign borrowing appears to be reversing. According to just-released data (pdf) from the Bank of International Settlements, China’s outstanding overseas debt shrank abruptly in the last quarter of 2014. It now stands at just more than $1 trillion—about $51 billion less than in the third quarter—making the People’s Republic the eighth-biggest borrower of international debt.
