The whole world is in turmoil after the Chinese stock market dropped the most since 2007. Chinese media even called the August 24 session `Black Monday`.
Although markets in developed countries have somewhat regained form, three major concerns still exist.
A man is cycling through a shopping district in Beijing.
China is the source of this domino effect.
However, pessimistic predictions seem to have gone too far.
Furthermore, China’s future depends on buyers, not exporters.
China is not in crisis.
Concerns about the Chinese economy also give rise to another worry, that emerging markets may once again experience the Asian financial crisis like in 1997-1998.
However, other concerns are completely valid.
Emerging countries are also suffering from oversupply, causing commodity prices, such as crude oil, to fall.
Perhaps only rich countries are less concerned about China’s slowdown.
Stock prices are also easily affected, as large companies often operate globally.
In case the above situation occurs, remember how Western officials struggled this week, when they realized they had few policy tools to revive the economy.
But monetary policy is just the beginning.
