The Guardian view on financial markets: Chinese flu, and the west’s empty medicine cabinet | Editorial
Potential disruption to the iron ore trade; the sudden exposure of the South African rand; the incompatibility of Xi Jinping's anti-corruption drive with that Wild East entrepreneurial spirit which has powered decades of Chinese growth. Watching panic spread from Shanghai and Shenzhen to London and New York, western analysts grabbed for straws of understanding in unfamiliar fields, reflecting not only a professional need to look as if they know what's going on, but a psychological yearning to impose order on a wild, mercurial swing in the mood. There may be no single reason why August 2015 proved the moment for the world's investors to take collective fright about the People's Republic. What there is however, lurking under all the anxiety, is a single question for governments everywhere. Namely, what's left in the locker?
Like a swaggering pre-crash financier, Beijing had grown to resemble a Master of the Universe. What it said more or less went; even the great crisis of 2008 caused only modest and impermanent departure from the course that it had set. But in recent months, the regime has been having to do ever more to achieve ever less. After inflating an extraordinary stock bubble, by enticing people of modest means into the market, the Communist rulers became visibly terrified of a burst. Restrictions were imposed on shares being sold off, while public bodies were sent on a buying spree. Instead of soothing nerves, these measures only stirred new concerns about why they had been necessary at all. Beijing's grip on events loosened again in the eyes of the world after it allowed the yuan to slide over the last fortnight. This might have been explained as a pragmatic adjustment to a slowdown at home after years in which a rising currency had eroded competitiveness overseas. Instead, there was spin suggesting that the move was all part of a well-laid plan, which succeeded only in alerting the world to the rate at which China had been burning through its vast reserves. That created such panic that further resources soon had to be spent on putting a floor under the slide.
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