Date: January 11, 2016
By: Associated Press
BEIJING – Barely more than a week into 2016, Chinese President Xi Jinping is having a rough time of
it, with challenges ranging from a plummeting stock market to new provocations from obstreperous ally North Korea. While none pose an existential threat to his administration, the world will be watching to see whether he has the sophisticated touch needed to find durable solutions and maintain stability.
Below is a look at the issues Xi is contending with:
STOCK MARKET VOLATILITY
China twice deployed its “circuit breaker” mechanism to halt trading as stock markets nosedived by 10 percent in the first week of the year. Beijing finally abandoned the mechanism, and left the perception that regulators don’t have a clue as they try to stabilize a market that more than doubled between late 2014 and June, then dived 30 percent, causing deep pain among retail investors.
Meanwhile, China’s currency, the yuan, has slid to a five-year low against the dollar, forcing the government to spend tens of millions of dollars from its foreign currency stockpile to defend it. The government last week guided the yuan 1.5 percent lower to assist hard-pressed exporters, but the clumsy move sent shockwaves through world markets, further weighing on Chinese share prices. [FULL STORY]