China's slowdown
Until last year, China was the nation with the largest economic growth rate. It was followed by India in second place. However, last year, China lost the title to India for the fastest growing economy which it held for over a decade. The market quake shook up the global economy and had profound effects on global trade as well. All economies that were dependent on Chinese consumption and trade suffered some strong economic setbacks as well. Europe, which was one of the largest exporters to China found itself in a worrisome position after the drop in the Chinese economy.
China has implemented austerity measures to quite some extent, however, the official stance of the government and the nation is otherwise. The state controlled media claimed that the problem in the economy was a minor setback, and the situation is under control and is working perfectly well. The truth, however, is far from the official government stance. Due to the drop in the growth rate and numbers, Chinese Forex reserves have fallen to a three year low, adding further worries to the national economy and financial market mood.
Record Forex loses
The Bank of China had devalued the yuan in August last year in order to restore functionality of the skittish market and economy, however, that seems to have done more damage than good. The Chinese Forex reserves have fallen at the rate of more than 100 billion dollars per month in the past couple of months. The Bank of China reported December as the worst fall of Forex reserves in its history. The government lost a little over 107 billion dollars in Forex reserves.
