China's economy: The key flaw that's shaking markets

Story highlights

  • Timothy Fuerst: Global market gyrations can be traced back to China
  • He says China's heavily state-owned financial sector isn't suited to handling its enormous economy

Timothy Fuerst is William and Dorothy O'Neill Professor of Economics at the University of Notre Dame. Fuerst's research has been published in the American Economic Review, Journal of Monetary Economics, Journal of Economic Theory, and many other journals. The opinions expressed in this commentary are his.

(CNN)The astonishing stock market gyrations over the last few days are closely linked to economic news coming out of China.

Timothy Fuerst
The importance of China for the global economy cannot be over-stated. First there is sheer size. China is the second largest economy in the world and a significant importer of commodities such as copper and oil.
Second, the world has come to expect Chinese economic growth rates of 10-12%, growth rates that have helped bolster the world economy especially during turbulent times in Europe and the U.S. But now Chinese growth is slowing, and there are significant concerns about the health of the Chinese financial system.