Many areas of the world shook a few days ago because the Shanghai or Shenzhen Stock Exchanges they plummeted 7% which caused a large amount of losses to be suffered in other markets around the world.
The loss that has been experienced in world markets is due to the fact that China is one of the main consumers In most countries.
Why did China's stock markets suddenly drop?
One of the problems Main reasons why China's stock markets fell It is due to the fact that for the fifth consecutive year the activity of companies and factories had fallen, so the economy could not take it anymore. Since December of last year, a notable drop of 48.2 began to be noted. The stock market experts have made it clear that there is a purchase rate of less than 50%, this indicates that the market is giving negative results.
Since 25 years ago, the Chinese market has managed great policies of low prices And this is something that can be seen on millions of Chinese sales pages. For many countries, this has been called unfair politics, as many countries cannot compete with those prices.
The only year in which the Chinese country has had its best moment was 2008. At that time, sales growth was almost 10% and a great economic slowdown began.
The stock market crash on January 7
La Stock market crash that occurred on January 7 It was striking for everyone and began to raise alarms in the countries. The reason is simple, since China is a large consumer of other countries in the world, we will bear in mind that if China does not have money to invest and buy the volume it buys, the economy of those countries would also be greatly affected.
There is so much money that China spends outside its country
Undoubtedly, most Chinese factories buy their products within the country, this represents 22.6 with respect to GDP; we are talking about more than 10 trillion dollars; however, the purchases they make outside the country is 18 billion euros. Most of the things they buy outside the country are food and goods.
The main countries that China buys from are South Korea, Japan and the United States.
It would be a hard blow for Latin America
Latin America sells a large number of products to ChinaSo if the economy declines, many Latin American countries would be in trouble.
Brazil and Chile They are the two countries that give the highest number of sales to China and even experts have said that it would not be strange for both countries to be in a kind of recession if China stops buying raw materials from the two countries.
Mexico is one of the main countries that sells to China and it is in 33rd place on the list of countries that sell to China in large quantities.
The biggest energy consumer
On the other hand, China is one of the countries that is considered the largest energy consuming country in the world. At the same time, it is a country that imports a lot of oil, which has made it become a country on a par with the United States in the purchase of oil. Last year it imported 7.2 million barrels of oil… per day.
What these losses say
Most countries woke up to the news of the problems in China and they were very startled since these losses speak of bad indicators for the country. Quickly, experts have given their opinion and said that most of China's factories and the economy in general will remain that way throughout the year. It is appreciated that the events that happened on the 7th are only the beginning of all this and that the Chinese economy is not going through its best moment.
A major devaluation last year
During the past year, in mid-October the currency of China suffered a major devaluation, the yuan was devalued by 4.6% and the purpose was to make exports cheaper so that the economy will accelerate and in this way, the Chinese economy will grow by 7% per year; however, as a consequence it had this devaluation.
On the other hand, Citigroup's chief economist has said that it is not only the Chinese economy, but that the world in general is in a very delicate moment and you can have serious problems if you are not careful with currency changes. .
It has made it clear that what is happening in China is not unique to the country and that it is expected to happen in other Latin American economies. Some countries in Asia will also be severely affected But after this year, conditions in many countries that are currently in crisis will begin to improve.
The authorities have known for months
For some months now, the authorities have tried to keep calm in China and keep calm in all parts of the country, as many factories began to panic.
The reason is that a price drop (which were already low) which gave little confidence to companies across the country. The drop in prices occurred in June last and since then they have not been able to recover.
At this point and to calm businesses, the Chinese government came in to help with a multimillion dollar sum for businesses while the country's currency stabilizes.
Several Measured by the regulatory commission of the stock market.
Who really wins or loses with all this
After day 7, most of the bags began to stabilize and even the Shanghai stock market started to decline but in the middle of the day they stabilized again.
Black Monday, as they have already begun to call this day in China, has become world news. The oil price happened in seconds to have the lowest price of the last 6 years (and that it has been low during the previous years) Gold, the metal also suffered a fall of 0.6%, which made that for the first time, everyone He will bring his hands to his head at the same time.
This decline effect was so great that in a matter of hours it passed to Europe and from there the entire planet jumped.
Even so, despite the moment of tension that has been lived and the many forecasts that are had for this year, the Chinese market is still the second world power and it seems that nothing is going to dethrone him from there. Economic experts have said that it was already expected that during the first half of the year, China's economy will go down because too many things have been moving in terms of currency; some of them have not been very ethical and it was known by the experts that it would happen.
The not so bad black mondays
It seems that Black Mondays carry a negative connotation, since in the largest world losses they have always been given that name, however, experts have recalled that all Black Mondays are followed by great gains for the country and very fast recoveries .
For China and its people, the fact that the government is aware and that it has promised that it will not let the country sink by making large injections of money when necessary is for the Chinese and the rest of the nations. economies that depend on China an oxygen valve very important.
Actually, the countries that would be damaged are the most developed, in this case, the majority are in Europe. Lower consumer demand and lower European production and exports will be noted.
Finally and as we have already said, Latin America would lose a large buyer of raw materials, This could lead to a spiral of low prices that could overshadow production or cause a crisis in some countries. The views in this case are set in Peru and Chile.
Botton line
Although the news from China and the closure of its stock market is something that has scared the whole world, experts have said that it is just one more move by China It didn't turn out as well as they hoped. At many points, Chinese stocks were already expected to decline but not expected to be at that level.
Many countries say that in reality, this is nothing more than a unfair practice so that the countries enter into crisis and somehow force the world to enter a devaluation.
The reason is that since their currency is very low, they could quickly recover from that, leaving many countries injured along the way.