The Harvard Gazette interviews Global Business and Economics Program Nonresident Senior Fellow Dante Roscini on the impact of China’s economic woes on the global economy:
GAZETTE: Why were so many caught off-guard by this crash? Weren’t there warning signs that this might happen?
ROSCINI: Yes, there were warning signs. Some of the indicators in China’s economy have been slowing for some time. In January, the official data for GDP growth was 7.4 percent, the weakest in 24 years and the first time in a century that growth fell short of the official target, although by only 0.1 percent. There has been continuing softness in data regarding manufacturing activity, exports, and imports. When China made a currency adjustment, market participants took fright, fearing a much bigger slowdown than they expected. The wheels came off an over-exuberant Chinese stock market, which had surged over 150 percent in 12 months and hit a seven-year high. The consequences were felt by financial markets everywhere.