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China, the world’s second-largest economy, released economic data on Monday that fell short of many economists’ expectations, triggering a stock market sell-off and raising deepening concerns about the nation’s economic prospects.
In an attempt to boost flagging economic growth, the central bank for the first time in more than two years injected cash into the financial system on Monday through short-term loans to banks. But the opening of the Chinese stock markets on Tuesday to the global financial system after months of being cut off from foreign capital triggered a meltdown in share prices that wiped out more than $300 billion in market value.
The benchmark Shanghai Composite index plunged 7.7 percent in the first 15 minutes of trading, causing the exchange to temporarily halt trading. After a brief respite, shares resumed their freefall, diving 8.5 percent in midday trading amid swelling panic among investors.
Trading was halted for the rest of the day at the close of business, coming just a week after regulators allowed markets to reopen after a monthslong suspension amid fears of a systemic financial crisis.
Meanwhile, China’s statistics agency announced lower-than-expected industrial growth of 4.4 percent in January and February, andgrades of factories and capital spending slowed as well.
China’s central bank, which usually holds monetary policy meetings at the end of each quarter, this month lowered interest rates, cut reserve requirements for banks and eased curbs on borrowing by local governments to support the economy. The measures, despite being some of the most expansive in years, have so far failed to stem the economic slowdown.
In addition to raising questions about China’s economic prospects, the disappointing data also underlined widespread concerns around the world over the outlook for global volume growth, which has slipped this year after expanding briskly in 2014.
Hong Kong, a global financial hub whose economy is closely tied to China’s, has now officially slipped into a recession. On a year-on-year basis, the Hong Kong economy shrank 2.9 percent in the fourth quarter of 2015 and another 1.1 percent in the first quarter of 2016.
In Japan, where the economic outlook is also gloomier than expected, expectations are rising that the central bank will increase its already negative interest rate policy, a move that could have ripple effects on a range of other economies.
As China’s economic engine sputters and growth slows, experts say, the pressures mount for Beijing to immediately take more drastic action to counter rising unemployment, market instability and political dissent.
The question of how to build a more sustainable economic model that does not rely mainly on exporting goods and building infrastructure at breakneck speed has likely not gone unnoticed by Chinese policymakers, who are under mounting protests at home from disaffected residents fed up with air pollution and rising inequality.
China is likely to face more pressure to take further bold steps in the coming weeks. The International Monetary Fund, which will release its quarterly economic health report on Tuesday, is widely expected to downgrade its outlook for the country’s near-term economic prospects amid growing concerns about an impending economic slowdown.
The bond market has also been rattled by signs that China is slowing down, falling to three-month lows on Monday as investors fled to less-hazardous securities.
The rout spread to the stock market on Tuesday, with Japan’s Nikkei 225 benchmark index wiping out about 3.5 percent of its value in early-morning trading before recovering slightly.https://www.nytimes.com/2025/02/20/world/asia/china-officials-slacking-economy.html
This article discusses the economic woes concerning China’s outlook, which has led to market instability and questioning of its economic prospects. The recent release of economic data has fallen short of economists’ expectations, triggering a stock market sell-off and raising deepening concerns. In an attempt to boost flagging economic growth, the central bank injected cash into the financial system through short-term loans to banks. However, trading was halted for the rest of the day at the close of business, coming just a week after trading resumed after being suspended for months. The disappointing data has raised widespread concerns around the world over the outlook for global volume growth, which has slipped this year after expanding briskly in 2014. This article’s tags are: china-officials-slackening-economy.
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