CHINA CRISIS.

"Statistics suggest that fast-growing economies are experiencing a significant slowdown in the sense that their growth rate decreases by at least 2 points, when their per capita income reaches about $ 17,000 in constant 2005 prices, a level China should reach around 2015 "

~Matt O'brien (Wonkblog)

• The origins of the stock market bubble

China's unbalanced growth for years.And for a decade, it announces that it is neither sustainable nor sustainable.

The Chinese nation experienced an irrational increase of 150% of his purse in less than a year.Add to this, the collapse of the housing bubble, that sees its activity back ever since 25 years by the Chinese government.The official figures speak of a 6% growth, but the country is on the brink: energy consumption fell, imports were down over 15%.Beijing may well have put 40% of its GDP to boost investment in 2008: growth was "artificialized".

If we do a little background, we will see that one year ago, the Chinese began to desert real estate that has experienced unprecedented bubble: the sector weighs more than 15% of GDP (two points more than in Spain) and millions of square meters no longer find takers.

Banks handed out credit at any cost, including to promote consumption, twice lower than in developed countries.But much will be used this time to irrigate another bubble "boom actions".Part of the investments in real estate are directed to another speculation market in this case.A rush encouraged by the Chinese authorities, who want to inflate the market capitalization of Shanghai, the principal stock exchange of the country, to try to win half a point to plummeting growth.China's central bank lower then in November 2014, its interest rates to try to revive the economy.The authorities are also launching a market interconnection platform that allows international investors to directly access, via Hong Kong, the sides titles in Shanghai and Chinese sides to buy shares in Hong Kong.

It is the explosion, like the excessive growth of the Shanghai Stock Exchange.In June 2014, it weighs less than 500 billion times dollars.Next to nothing compared to large spaces such as: New York, London or Paris.But Shanghai will get bigger and faster.One year later, in June 2015, she proudly displays 6.500 billion.More than three times the gross national product of France.Meanwhile, the country has witnessed an unprecedented rush of small speculators: more than 22 million in May have opened a bank account dedicated to stock market investments.The outbreak peaked with 5,000 point reached June 13 by the Shanghai Stock Exchange.

• The explosion of the bubble

On June 13, Constable Chinese financial market decides to act by limiting the use of operations "margin": operations to borrow from a brokerage firm to buy stock.

The next day, the Chinese comission of financial market regulation (CSRC) also prohibits transactions with borrowed funds outside of the circuit operations "on margin".So, investors such as retail investors begin to disengage.After a year of runaway largely financed by loans, the Chinese stock market "corrects" by 30% in three weeks (until early July): 3.000 billion capitalization in smoke.The Shanghai Composite index fell a summit in June 12 5100, to a low of 9 July 3500.

To avoid panic, the authorities are doing exactly the opposite of their plan of June 13.They relax the restrictions on "margin operations," technique, remember, of borrowing from financial intermediaries to buy shares.A way to give Chinese means the ability to continue to borrow to continue their financial Adventure.But the Chinese authorities are not satisfied that that.They cut interest rates.They freeze the IPO projects.They orchestrate the mobilization of brokerage firms and fund managers, who collectively committed to purchase at least 120 billion yuan (17.5 billion) of shares.They even allow a public company investors financing margin benefit, a direct line of liquidity from the central bank.The stock market returns to form for a few weeks before going back.

The air pocket is a reminder that the Chinese economy is much less than what is suggested by the authorities.The three recent successive devaluation of the yuan central rate against the dollar shows that Beijing is resigned to leave the weapon of exchange rate to specifically avoid faltering economic conditions.

• The crisis-related concerns 

If the Chinese recession is confirmed, it could lead the fall of Brazil, which has in turn will cause the United States.Japan when with him, just announced that it fell back into recession, Brazil and Canada as well.In the same context, growth has been revised downwards in the United Unis.Seule France, trusts that it restarts.Chinese crisis challenges highlight the systemic risks to its economy.And its contagion to the global economy.The automotive market accounts for more than 10% of its sales in China, the energy 17%.And certain sectors such as materials can weigh up to 30% of their turnover in China.

~Frédéric Betta-Akwa