When it comes to the power of arcane financial matters to capture global attention, nothing in recent weeks compares to the drama surrounding Greece’s debt. But there is another simmering crisis with potential to do far more damage to the world economy. Consider that as depositors in Greece lined up at ATMs to withdraw pocket change from their bank accounts, investors in China were bleeding assets at an unprecedented rate.
And these days, even a small financial tremor in China can be felt around the world.
The Chinese stock market has endured its sharpest drop in more than 20 years. The last time Chinese stocks suffered a collapse of this magnitude, in 1992, China was a relatively minor player in the global economy, and the stock market was an insignificant part of the Chinese economy. Back then, a stock market crisis had little power to derail the Chinese economy, and even if it did, the Chinese economy had little power to derail the global economy. That has now changed.