This week, China, the world’s second largest economy, suffered massive financial losses causing trillions of dollars to be wiped from global stock markets.
On August 24, Chinese stocks suffered their steepest fall in one day, with Shanghai’s main share index closing down at 8.49 percent.
Dubbed ‘Black Monday,’ the effects were felt globally, with indices nosediving one after the other.
Before Monday’s rout, more than $3.2tn had already been wiped off China’s stock market after investors, worried about slow growth, embarked on a selling frenzy.
Chinese authorities have intervened by supporting stock prices, but despite spending some $200bn to stimulate the economy, Beijing has failed to stem the crisis.
On Counting the Cost, we have always said that stock movements do not tell the real story, and that the link between markets and the real economy is broken.
On this week’s episode, we speak to Steve Tsang, a professor of Contemporary Chinese Studies at the University of Nottingham, to discuss how China’s economy is divorced from the real economy.
Since China’s devaluation of the yuan earlier this month, an estimated $5tn has been wiped off global stock markets.
Jolting financial markets, emerging and developing nations have been the hardest hit and have seen their currencies fall to multi-year lows.
Albert Essien, the CEO of the pan-African bank EcoBank, joins the programme to discuss the impact on African economies.