For the longest time this year, Chinese markets were of a major concern, especially considering the drastic fall the nation witnessed after certain buyouts from the market had occurred after a panic struck market began to buy out all liquidity from the markets. In addition to the woes that hailed from China, the oil markets and Brent crude index has kept falling to nearly a two decade low. Oil prices have never been this low ever since the early 90’s. Earlier this year, when Chinese markets went into a tizzy, the government began to limit the amount of buyout from the markets.
The before effect
This worsened the situation, as businesses and other investments began to see it as a threat to the free market in a supposed communist China. The Chinese market fall had nearly crashed the national market, but the drastic slump has put the country back by nearly a decade. China lost its position as the fastest growing economy to India after the market crash. The oil conventional oil markets of Brent and crude oil witnessed a sudden slump towards the end of last year.
After the United States introduced the method of hydraulic fracturing to withdraw shale oil, the United States rose to a global player in the oil market. However, it has resulted in a drastic setback amongst the Organization of Petroleum Exporting Nations members, of which America is not a part. Amidst all the commotion that had ensued, there was some restoration that has been serving as a temporary solution, however, from the fragile foundation, the world is witnessing a potential crash of the oil markets. This holiday season, as most people were off on their holiday goodness, the Chinese markets seemed to recess the same as earlier this year. In addition to the crisis, what made matters worse was the further slump in the oil market.
The after effect
The drop has affected the Australian and Canadian dollar too, dropping its value. The consistent drop in the Chinese economy since the beginning of this year displays signs of over exertion on the economy, which seems to be panting desperately for a solution. The ramifications could be dire considering the role that the world’s second largest economy plays in that of the economic matters of several other trading nations. International Brent crude has now fallen to a little over 37 dollars, and the Chinese economy has consistently fallen by 1.6 percent for the fourth consecutive quarter.