Traders work on the floor of the New York Stock Exchange on September 1, 2015 in New York City. (Xinhua/AFP)
1. Does China's recent stock market rout mean the Chinese economy is in trouble? No.
"Investors should not get carried away by the collapse of the Shanghai Composite Index, not least because its performance often bears little relation to that of the economy, primarily due to wild swings in its valuation," warns Melanie Debono from Capital Economics in a note to clients cited by the Wall Street Journal (WSJ).
A worker counts Chinese currency Renminbi (RMB) at a bank in Linyi, east China's Shandong Province, Aug. 11, 2015. (Xinhua Photo)
2. Does the Chinese yuan's recent devaluation mean Beijing is resorting to competitive depreciation to shore up the economy? No.
On Aug. 11, Beijing changed the way it values the yuan, allowing markets to play a greater role in the exchange rate, WSJ writer Ian Talley noted in an article, adding that market pressure has long been for depreciation, so allowing the currency to be more market-determined would, in the near-term, naturally see the yuan move lower.
Meanwhile, the yuan has appreciated by nearly 15 percent against a basket of global currencies over the last year, "so the fact that the yuan came down 3% to 4% is not going to make much difference," Ted Truman, a former top international finance official at the U.S. Treasury and the Federal Reserve, was quoted by the WSJ as saying.
Workers try to load cargoes for export at a port in Lianyungang City, east China's Jiangsu Province, Feb. 1, 2015. (Xinhua Photo)
3. Is China's economy heading for a hard landing? No.
"China is unlikely to crash-land. It has the capability to manage a soft landing," South Korean Finance Minister Choi Kyung-hwan said in an interview with the WSJ on the sidelines of a G20 finance chiefs meeting.
China's economy is still growing at 7 percent, nearly three times as fast as the West's star performers, Britain and the United States, Daniel Gros, director of the Centre for European Policy Studies in Brussels, noted in an interview with Xinhua. The slowdown "was a natural consequence of an over-investment cycle, which is now nearing its end."
"The service sector is now the driver of growth. So the fact that industrial growth has slowed down quite a bit does not mean, as it would have meant 10 years ago, that the economy is falling off a cliff," Nick Lardy, a China expert at the Peterson Institute for International Economics, was quoted by the WSJ as saying.
Based on electricity consumption, "I just dont see any signs that the Chinese economy is experiencing a hard landing," the WSJ quoted Torsten Slok, Deutsche Banks chief international economist, as saying.
In the eyes of Australian Treasurer Joe Hockey, market reactions have been overblown. "Were confident about our understanding of the Chinese economy and we see over time huge opportunities for growth."
U.S. Federal Reserve Chairwoman Janet Yellen testifies before the House Financial Committee July 15, 2015 on Capitol Hill in Washington, DC. (Xinhua/AFP)
4. Who is to blame for the recent turbulences in the global financial market? Probably the United States.
Though the worldwide fluctuations of late were triggered by volatile Chinese markets, that does not mean that the economic problems in China are responsible for the weak state of the global economy, said Gros.
In fact, the fundamental reasons for the recent global market turmoil are the anxiety aroused by the anticipated U.S. interest rate hike and the fragile world economic recovery.
"With nervous (and illiquid) financial markets, sometimes small news can lead to large moves. The rebound in some markets, such as the U.S. and East Asia, shows that there was a problem of liquidity, otherwise you could not explain very large moves with so little news," Gros said.
Choi, the South Korean finance minister, also urged the U.S. Federal Reserve to make more efforts to reduce uncertainty over the pace of its expected interest rate increases through sufficient communications with markets.
"If uncertainty continues to go on like this, it will be a big burden for the world economy," Choi was quoted by the WSJ as saying.
