THERE IS NO WAY TO STOP CHINA'S FREE FALL
Linette Lopez
Investors everywhere are looking for some reason — any reason — to forecast a reversal in China's markets.
The world's second largest economy has led the globe in a no-holds-barred sell-off over the past few days.
The Shanghai Composite, already weak from a punishing June and July, has erased all its gains for the year. This reflects a malaise in the wider, real economy. Chinese industrial data is flashing signs of danger the world hasn't seen since 2009.
The Chinese government is doing what it can to defend the yuan, which it devalued in response to anemic export numbers. We're already seeing that decision hit China's trading partners and competitors. Vietnam devalued its currency, the dong, last week.
Expect more responses and devaluations, but don't expect a rescue from the Chinese government.
The whole world is waiting for massive action from the Chinese government — a bazooka that can blast through all this market madness.
The problem is that it doesn't have one.
That's because China's growth model is broken, and it can't be fixed by cash injections or other emergency policy measures.
The old fixes won't work anymore.