Panicking investors need time-out on a China in transition

ON the way to remaking China's economy, President Xi Jinping has hit many roadblocks: vested interests, a change- averse Communist Party, local officials accustomed to the status quo. Who knew the real barrier would be foreign investors?

For years, the world has called on China to loosen its grip on the yuan, drop its arbitrary growth targets, allow stocks to fall, attack corruption and let reckless borrowers suffer losses. But whenever Beijing has taken any of these steps, global investors have responded with fear and trembling.

Wall Street's sudden turn for the worse doesn't have anything to do with China's economic fundamentals. News emerged last Friday that China's manufacturing activity had fallen to a six-year low - but that was entirely consistent with reams of recent data showing weak industrial production, retail sales, inflation and rental rates. Investors can't be shocked to hear that China's 7 per cent growth rate in the first six months of 2015 was the slowest in six years.