as the Chinese stock market plummets in
the summer of 2015
economists around the world wonder
whether or not it will be able to
recover welcome to watchmojo.com
we’re counting down ten crucial facts
you should know about the Chinese
economy number 10 what is China’s
current market situation China’s is the
world’s fastest growing economy as well
as the world’s second largest economy
with an estimated annual gross domestic
product of over 11 trillion dollars
trailing the US which generated about 17
trillion in 2013 throughout the first
half of 2015 China saw a dive in its
overall trade with imports falling as
China attempted to steer its economy
from one constructed on a high growth
through big investment to one that is
consumer based by July 2015
shanghai stocks had plunged more than 30
percent and Chinese companies had lost
three point nine trillion dollars in
value that’s 15 times the size of the
Greek economy whose economic woes had
received much more media attention
during the same period number 9 how has
China’s economy evolved although China
currently holds the position as the
world’s second largest economy it only
began to rapidly grow beginning in the
early 1920s and that despite numerous
Wars and economic instability it
suffered an economic downturn during the
Great Leap Forward which ran from 1958
to 1961 led by Mao Zedong the founding
father of the People’s Republic of China
this campaign embodied the rapid
transition from an agrarian economy to a
socialist one this was to be achieved
through an increase in industrialization
and collectivization in order to
encourage the sharing of agricultural
tools and animals unfortunately it led
to the great Chinese famine in which up
to 45 million people died as a result of
the radical change in agricultural
practices the lack of economic
management and
persecution of those who refused to
adhere to the campaign’s priorities and
enforced policies number eight
how has China’s economy evolved part two
China’s economic reform began in the
late 1970s with the first stage
introducing foreign investment the D
collectivization of the agricultural
sector and the development of
entrepreneurial businesses the later
stage of reform began in the late 80s
and included the privatization of
state-owned industries and the reform of
protectionist policies and regulations
this launched unprecedented economic
growth with China creating multiple
special economic zones within the
country thereby enabling foreign
investment within these areas between
1978 and 2013 China’s gross domestic
product increased around 10.5%
annually leading the country to become
an engine of economic growth both
regionally and worldwide number seven
who invested in the stock market in 2014
the Chinese government encouraged
investing in the stock market and made
the prospect more enticing by relaxing
borrowing limitations and facilitating
investing this caused widespread
investment by the middle class and
novice investors and led the Shanghai
market to grow by more than 150 percent
over two-thirds of new Chinese investors
had never graduated from high school and
most took on debt in order to invest so
the 2015 stock market tumble has led
many casual investors to fear investing
in stocks again and could lead the
overall population to question the
ruling Communist government and their
handling of the markets number six
how has China’s housing market grown
China experienced a real estate and
property bubble from 2005 to 2013 but
saw average housing prices in the
country increased between 10 and 15
percent annually property developers
continued to build commercial and
residential properties despite the fact
that there were an estimated 64 million
vacant apartments the country is filled
with ghost towns and malls that remain
largely unoccupied for example in two
thousand five China opened the world’s
largest mall the new South China mall
yet it remained a dead mall with a less
than ten percent occupancy rate for
years the housing market issue was
further exacerbated by the fact that
lower-income individuals were buying
homes valued at eight times their annual
income for context the guideline for
property buying in the United States is
three times your annual income yet there
may be hope that the housing market is
slowly recovering as it posted growth in
national property sales for the first
time in 15 months in April of 2015 this
is especially important for the Chinese
economy as housing and construction
accounts for as much as 30 percent of
the country’s gross domestic product
number five what has China done to stem
the stock market freefall since November
of 2014 the Chinese government has cut
interest rates four times and has
reduced the amount of cash that banks
are allowed to hold in order to push
lending more than fifty percent of the
companies listed on the Shanghai and
Shenzhen composite indexes where China’s
mainland stock exchanges occur have
filed for a trading halt in an attempt
to stop the losses as of July 2015 in
order to stop the plummeting of the
Chinese stock exchange the government
has imposed harsh restrictions on listed
company shareholders and managers
furthermore those shareholders or
managers who own over 5% of a company’s
shares will not be able to sell their
shares for six months the government has
also restricted new initial public
offerings for companies hoping to launch
themselves onto the stock exchange
number four how is China’s stock market
different from the West the Chinese
stock market is relatively new as its
two main stock exchanges only began
operating in the 1990s this is in stark
contrast to the new york stock exchange
this American Stock Exchange which was
founded in 1817 is the world’s largest
Stock Exchange and has a daily trading
value of over 169 billion dollars the
Shanghai and Shenzhen Stock Exchange’s
are independently operated in the peak
Republic of China or mainland China the
Hong Kong Stock Exchange and the Taiwan
Stock Exchange are also part of the
Chinese stock exchanges despite the fact
that they are not in mainland China
territory furthermore those who trade in
the Chinese market are typically
ordinary people whereas in the United
States institutional investors perform
the majority of the transactions finally
unlike the United States China’s stock
market is insulated and not inextricably
tied to the country’s overall economy
about six percent of Chinese households
have stock investments whereas over half
of American households hold stocks in
their investment portfolios number three
is the potential Chinese stock market
crash important economists have drawn
stark comparisons between the 2015
economy of China and the economy of the
United States starting in 1929 as this
period marked the beginning of the Great
Depression the Great Depression was a
global economic depression that lasted
for nearly a decade and saw both poor
and rich countries loaded with high
unemployment increased poverty failed
banks and widespread homelessness in
order to combat the 2015 Chinese stock
market freefall a group of 21 Chinese
brokerage firms pledged on July 4th 2015
to commit nearly 20 billion dollars to a
stock fund in order to stabilize the
shares this plan eerily mirrors the
actions of 1929 when five of America’s
most influential financiers met on Wall
Street and constructed a plan to pool
resources to stave off a fall in stock
prices the plan soon failed however and
led the Dow Jones to severely drop and
launch the Great Depression number two
could the potential crash affect the
world economy due to the fact that
mainland China has limited the amount of
stocks a foreigner is allowed to
purchase the possibility of contagion
outside of China if the market were to
continue its downward spiral would be
minimal according to the Bank of America
foreign investors own less than one
percent of mainland China stocks
yet a stock market crash could still
have an impact on the world as China is
home to the second largest economy and
its consumers for example Chinese
consumers represent a boon for overseas
companies as they spend more on travel
than any other country and they
purchased twelve percent of the world’s
luxury goods this could soon disappear
as consumers are forced to restrict
their spending in the future number one
is this a slowdown or a meltdown
despite the plunge in the stock market
and the decline in the real estate
property sector the Chinese economy
continues to grow at a rate that
outpaces the rest of the world yet it
cannot afford the burst of a stock
market bubble as its property market
remains depressed and the country’s
corporate and local governments hold
debt that amounts to more than two
hundred and eighty percent of the
country’s GDP the world has largely
relied on China to prop up the economy
as it still recovers from the global
financial crisis of 2008 this latest
perceived market bubble could be the
nail in the Chinese economic coffin and
could lead to a total market meltdown or
it could simply lead to a slowdown as
the government transitions to a more
efficient economy but only time will
tell
did these facts surprise you to vote for
which news story is covered next
head over to watchmojo.com slash suggest
and be sure to hit that subscribe button
for more newsworthy top 10s published
every week
you
[Music]
the summer of 2015
economists around the world wonder
whether or not it will be able to
recover welcome to watchmojo.com
we’re counting down ten crucial facts
you should know about the Chinese
economy number 10 what is China’s
current market situation China’s is the
world’s fastest growing economy as well
as the world’s second largest economy
with an estimated annual gross domestic
product of over 11 trillion dollars
trailing the US which generated about 17
trillion in 2013 throughout the first
half of 2015 China saw a dive in its
overall trade with imports falling as
China attempted to steer its economy
from one constructed on a high growth
through big investment to one that is
consumer based by July 2015
shanghai stocks had plunged more than 30
percent and Chinese companies had lost
three point nine trillion dollars in
value that’s 15 times the size of the
Greek economy whose economic woes had
received much more media attention
during the same period number 9 how has
China’s economy evolved although China
currently holds the position as the
world’s second largest economy it only
began to rapidly grow beginning in the
early 1920s and that despite numerous
Wars and economic instability it
suffered an economic downturn during the
Great Leap Forward which ran from 1958
to 1961 led by Mao Zedong the founding
father of the People’s Republic of China
this campaign embodied the rapid
transition from an agrarian economy to a
socialist one this was to be achieved
through an increase in industrialization
and collectivization in order to
encourage the sharing of agricultural
tools and animals unfortunately it led
to the great Chinese famine in which up
to 45 million people died as a result of
the radical change in agricultural
practices the lack of economic
management and
persecution of those who refused to
adhere to the campaign’s priorities and
enforced policies number eight
how has China’s economy evolved part two
China’s economic reform began in the
late 1970s with the first stage
introducing foreign investment the D
collectivization of the agricultural
sector and the development of
entrepreneurial businesses the later
stage of reform began in the late 80s
and included the privatization of
state-owned industries and the reform of
protectionist policies and regulations
this launched unprecedented economic
growth with China creating multiple
special economic zones within the
country thereby enabling foreign
investment within these areas between
1978 and 2013 China’s gross domestic
product increased around 10.5%
annually leading the country to become
an engine of economic growth both
regionally and worldwide number seven
who invested in the stock market in 2014
the Chinese government encouraged
investing in the stock market and made
the prospect more enticing by relaxing
borrowing limitations and facilitating
investing this caused widespread
investment by the middle class and
novice investors and led the Shanghai
market to grow by more than 150 percent
over two-thirds of new Chinese investors
had never graduated from high school and
most took on debt in order to invest so
the 2015 stock market tumble has led
many casual investors to fear investing
in stocks again and could lead the
overall population to question the
ruling Communist government and their
handling of the markets number six
how has China’s housing market grown
China experienced a real estate and
property bubble from 2005 to 2013 but
saw average housing prices in the
country increased between 10 and 15
percent annually property developers
continued to build commercial and
residential properties despite the fact
that there were an estimated 64 million
vacant apartments the country is filled
with ghost towns and malls that remain
largely unoccupied for example in two
thousand five China opened the world’s
largest mall the new South China mall
yet it remained a dead mall with a less
than ten percent occupancy rate for
years the housing market issue was
further exacerbated by the fact that
lower-income individuals were buying
homes valued at eight times their annual
income for context the guideline for
property buying in the United States is
three times your annual income yet there
may be hope that the housing market is
slowly recovering as it posted growth in
national property sales for the first
time in 15 months in April of 2015 this
is especially important for the Chinese
economy as housing and construction
accounts for as much as 30 percent of
the country’s gross domestic product
number five what has China done to stem
the stock market freefall since November
of 2014 the Chinese government has cut
interest rates four times and has
reduced the amount of cash that banks
are allowed to hold in order to push
lending more than fifty percent of the
companies listed on the Shanghai and
Shenzhen composite indexes where China’s
mainland stock exchanges occur have
filed for a trading halt in an attempt
to stop the losses as of July 2015 in
order to stop the plummeting of the
Chinese stock exchange the government
has imposed harsh restrictions on listed
company shareholders and managers
furthermore those shareholders or
managers who own over 5% of a company’s
shares will not be able to sell their
shares for six months the government has
also restricted new initial public
offerings for companies hoping to launch
themselves onto the stock exchange
number four how is China’s stock market
different from the West the Chinese
stock market is relatively new as its
two main stock exchanges only began
operating in the 1990s this is in stark
contrast to the new york stock exchange
this American Stock Exchange which was
founded in 1817 is the world’s largest
Stock Exchange and has a daily trading
value of over 169 billion dollars the
Shanghai and Shenzhen Stock Exchange’s
are independently operated in the peak
Republic of China or mainland China the
Hong Kong Stock Exchange and the Taiwan
Stock Exchange are also part of the
Chinese stock exchanges despite the fact
that they are not in mainland China
territory furthermore those who trade in
the Chinese market are typically
ordinary people whereas in the United
States institutional investors perform
the majority of the transactions finally
unlike the United States China’s stock
market is insulated and not inextricably
tied to the country’s overall economy
about six percent of Chinese households
have stock investments whereas over half
of American households hold stocks in
their investment portfolios number three
is the potential Chinese stock market
crash important economists have drawn
stark comparisons between the 2015
economy of China and the economy of the
United States starting in 1929 as this
period marked the beginning of the Great
Depression the Great Depression was a
global economic depression that lasted
for nearly a decade and saw both poor
and rich countries loaded with high
unemployment increased poverty failed
banks and widespread homelessness in
order to combat the 2015 Chinese stock
market freefall a group of 21 Chinese
brokerage firms pledged on July 4th 2015
to commit nearly 20 billion dollars to a
stock fund in order to stabilize the
shares this plan eerily mirrors the
actions of 1929 when five of America’s
most influential financiers met on Wall
Street and constructed a plan to pool
resources to stave off a fall in stock
prices the plan soon failed however and
led the Dow Jones to severely drop and
launch the Great Depression number two
could the potential crash affect the
world economy due to the fact that
mainland China has limited the amount of
stocks a foreigner is allowed to
purchase the possibility of contagion
outside of China if the market were to
continue its downward spiral would be
minimal according to the Bank of America
foreign investors own less than one
percent of mainland China stocks
yet a stock market crash could still
have an impact on the world as China is
home to the second largest economy and
its consumers for example Chinese
consumers represent a boon for overseas
companies as they spend more on travel
than any other country and they
purchased twelve percent of the world’s
luxury goods this could soon disappear
as consumers are forced to restrict
their spending in the future number one
is this a slowdown or a meltdown
despite the plunge in the stock market
and the decline in the real estate
property sector the Chinese economy
continues to grow at a rate that
outpaces the rest of the world yet it
cannot afford the burst of a stock
market bubble as its property market
remains depressed and the country’s
corporate and local governments hold
debt that amounts to more than two
hundred and eighty percent of the
country’s GDP the world has largely
relied on China to prop up the economy
as it still recovers from the global
financial crisis of 2008 this latest
perceived market bubble could be the
nail in the Chinese economic coffin and
could lead to a total market meltdown or
it could simply lead to a slowdown as
the government transitions to a more
efficient economy but only time will
tell
did these facts surprise you to vote for
which news story is covered next
head over to watchmojo.com slash suggest
and be sure to hit that subscribe button
for more newsworthy top 10s published
every week
you
[Music]
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