Sharp Decline in Chinese Stock Market; Decrease in Dollar Value

The value of the Chinese stock index sharply fell on Monday, September 2, dropping by about 9 percent. The value of the European stock index also fell by about 3 percent, and the dollar has decreased in value against the euro. This drop in the Chinese stock index is unprecedented in the last eight years. According to the British newspaper The Guardian, experts say it seems that not only is Beijing unable to control the stock market situation, but it has also failed to understand the existing problems in a timely manner. This drop has been reported while the Chinese government had authorized the use of the state pension fund in stocks. According to Reuters, serious doubts about the possibility of an increase in U.S. interest rates this year have led to a decrease in the value of the dollar against the euro. The Associated Press reports that smaller investors in China have been severely affected by the drop in stock values, which has overshadowed the Chinese Communist Party's plans for reforms in the industry. The prices of oil and other raw materials are also declining due to forecasts of lower demand from China and other major importers. Oil prices in the U.S. have reached their lowest level in six and a half years. Fereydoun Khavand, an economics professor in Paris, told Radio Farda that 'the most important factor of concern about the future of the Chinese economy is the reports regarding the decline in its GDP growth rate.' According to this expert, 'China enjoyed high growth rates of 9 to 11 percent for nearly thirty years... and such rapid growth cannot be eternal. An economy of two to six hundred billion dollars can thrive for a few years with double-digit growth rates, but when it reaches over eleven trillion dollars like China, its growth rate naturally declines.'