China'S Bad 2016 Is Still Hard For The Future.

China's failure in 2016 was an example of the disputed stock market fueling mechanism that has just started and China may face more difficulties.

"As indicated by the measures taken by the Chinese government to manage the stock market and the foreign exchange market in the past few months, the risk of policy mistakes is outstanding," the report entitled "Walled in: China" s Great Dilemma said.

The investment management team of Goldman Sachs analyzed the proportion of exports to gross domestic product (GDP) by charts, showing the reason why the impact of China's economic slowdown on the global economy was exaggerated.

In the US, exports to China account for only 0.7% of GDP.

However, the proportion of emerging markets is 2.3%, Korea is as high as 10.3%.

China's unexpected devaluation of the renminbi and the chaotic market regulation have shaken investor confidence.

Li Yuanchao, vice president of China, said in an interview with Bloomberg News Agency in Davos this week that China is willing to maintain its intervention in the stock market to ensure that a small number of speculators will not benefit and sacrifice the interests of ordinary investors.

Goldman Sachs predicts that the yuan will depreciate 10%-20% in the next two years: "there is no doubt that the renminbi will further depreciate before 2020, if the depreciation of the RMB becomes disorder or the massive capital outflow in China after capital account liberalization."

In terms of growth,

China is likely to achieve a minimum growth target of 6.5% in the next two or three years, and China has enough resources to avoid the so-called "hard landing" in 2016.

But in the long run, China's outlook is even more bleak.

After 20 years of record high economic growth, China, the world's most populous country, is facing the risk of stepping into neighboring Japan.

The downturn may even suffer from deflation.

"China's entry into the deceleration cycle is much lower than that of Japan in the ten years lost," the report warned.

"China is poorer, the population structure is more negative, human capital factors are more weak, investment dependence is higher, and the ranking of business environment indicators is even more backward."

A new report written by Goldman Sachs Group

The problem is not just the slowdown in the economy, but also the nervousness of investors.

"We think that the developed financial markets are likely to overreact to the deteriorating China situation," the team led by Sharmin Mossavar-Rahmani, chief investment officer of Goldman Sachs Private Wealth Management, said in the report.

"Our conclusion is that the scale of direct and indirect exposure to China's economic and banking sector is not enough to have a major impact on major economies and financial markets."

How should we do this? It is not easy to persuade the market to remain calm about China's economic growth concerns.

China faces many challenges at the moment. From corruption to unreliable economic data, Goldman Sachs expects that China will continue to make market fluctuations in the next five years, and then spread to other emerging markets.

Their proposal is to reduce the positions of such vulnerable assets.