It is a statement of the obvious but China’s economy is too large to be ignored. Investors should remind themselves of this statement when the drift of media coverage becomes negative. In any country, dig a little bit deeper and you can sure find significant economic problems.
Remember the US sub-prime mortgage crisis which triggered the Global Financial Crisis of 2008 or the harm Brexit has done to the UK economy? Or presently in Australia, which has a rapidly imploding housing sector because rising interest rates may soon start to throw people who cannot service their loans out of their homes to live on the streets.
However, none of these problems, no matter how significant some are, seem to taint our assessment of the European and US economies as we consider them to be transitory problems. But when we consider China and its problems of a similar nature, the conclusion often edges towards the hysterical. The naysayers will say: “China is on the verge of collapse and is an unsafe investment!”
