China’s Market Rout Is a Double Threat

China’s stock markets have bounced back, but the strong of losses may have dented investor confidence in the government’s ability to control those markets. The abrupt loss of Chinese shares’ value over the course of a few weeks, equal to six times Greece’s foreign debt, and a general downturn in the economy poses a threat to the global economy, report Keith Bradsher and Chris Buckley for the New York Times. The government cracked down on speculators. Private brokerage firms, the People’s Bank of China and the country’s sovereign wealth fund also purchased stocks to boost the market. The government has linked its standing with market performance and that could dampen public perception of invincibility. Consumer confidence has decreased as economic growth has slowed and that could have political implications. Total debt amounts to almost $1 trillion, and defaults could prove disastrous. The collapse of midsized companies could force the government to rethink its shift towards capitalism. – YaleGlobal