Weak stocks could mean more crises
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China stocks continued the downward trend over the first half of this year. By June 30, the Shanghai Stock Exchange Composite Index dipped 26.82 percent and the Shenzhen Component Index dropped 31.48 percent.
So far this year, the Shanghai Composite has become Asia's worst performing index and one of world's worst.
But China's stock market is not the only one that has fared poorly; the US stocks fell, too. Dow Jones Industrial Average ended the second quarter down 1,082.61 points, dipping below the 10000 threshold.
China's A-share stock market performed even worse than that of Greece, an economy mired in the sovereign debt crisis.
The poor performance of the stocks in these two big economies seems to indicate that the second economic crisis is on the way.
Let's look at the other economic indicators. A US job report showed that unemployment rate is still very high, and US consumer confidence recently fell sharply. Consumption, as the US economic engine, is apparently slowing down.
China's economy is not doing badly, but there is clear sign of a slowdown in the pace of its economic growth. China's Purchasing Managers' Index has fallen for the second consecutive month, so it is no longer realistic to rely on business expansion to boost economic growth. China's domestic demand is restricted by its low income level and social security system.
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