Early 2016, China's stock market was welcomed with plunging numbers. They made it to the world's headlines, especially in the different financial magazines, blogs, online news portals, and more. However, the stock market crash was not only for China. It has led to declines in almost all the major markets around the world and sent global investors into a panic. But for China, this has become their "new normal."
According to an article published in Seeking Alpha, one must come to understand that China is at its so-called historical development stage of transition. With this comes the economy's continuous downward pressure for the year. This is a time where their economy slowly shifts from rapid to moderate growth. "During this transition, unusual events will inevitably occur. Many who are pessimistic about the future of the Chinese economy do not fully understand the laws of economic growth during periods of adjustment, nor are they aware of the bigger trends."
It can be recalled that the decades have been China's decades in terms of growth -- high investment, strong export orientation and energy-intensive manufacturing. However, with every positive thing comes negative things. "While this growth lifted hundreds of millions out of poverty, it also heightened problems of inequality - personal, regional and urban-rural - and intensified pollution, congestion and greenhouse gas (GHG) emissions."
According to a case study on China, China has matured in terms of skills, wages, productivity and more in the midst of recognising these difficulties. Thus, the economic strategy has changed. "China has now entered a new phase of economic development - a "new normal" - focused on better quality growth."
So is China facing its doom? No.
The study states: "China's new development model is continuing to promote economic growth while driving down its GHG emissions. This new strategy is now playing out in China's economy."
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