What impact of the Chinese stock market crunch ?

Even if the turmoil is now quieting, at least for the Chinese stock market fall and Global stock markets which have initially followed the Chinese economy in late august, it was quite visible that the downside risks of the Chinese economy has created uncertainties and volatility in the markets.
In mid-june, the Shangai stock market has dropped by approximately 40%, the largest decline in the past two decades, and the renminbi was devalued as well by 1,9% against the US dollar.
But the impact of these Chinese stock market crunch and renminbi devaluation should not be overestimated. Unlike in the Western countries, the stock exchange is small compared to the size of the economy and chinese consumers do not depend on shares. So, the impact of the crash on the real economy was small as the impact of the devaluation of the renminbi. It seems now, even to global markets, very much a local issue. Commodity-exporting countries were, for example, clearly affected, making them the main victims of the slowdown.
Despite of that, the events of this summer have highlighted the vulnerabilities of the Chinese economy, the slow rebalancing and the risks of further government intervention in order to keep growth at 7% and which has increased a risk of a hard landing.

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