Global Financial Turmoil Continues on Fears of Slower Growth (Source globalresearch.ca) China’s stock market was closed early for the second time in four days as stocks plunged as soon as it opened.. When the markets re-opened the losses continued and the market was shut for the day when they hit 7 percent. The China plunge came after a day of turbulence in European and US markets on, prompted by a further drop in oil prices, rising concerns over Chinese growth and financial stability, and worries over emerging market debt. Reports of a North Korean hydrogen bomb test added to the uncertainty. In the US, the major indexes fell by more than 1 percent, with the Dow and the S&P 500 ending the day below 17,000 and 2,000, respectively. The US share sell-off followed sharp declines in Japan and other parts of Asia, as well across Europe. The main factor at work is the deepening trend toward recession in the global economy, which is starting to undermine the financial bubble that has been created by the pumping of trillions of dollars into global financial markets by the US Fed and other major central banks. Market analysts speaking to the American business channel CNBC cited China and signs of a worsening situation globally and in the US. “It’s pretty much the same story. You’ve got China growth problems,” and “the US manufacturing sector seems to be in recession territory,” one commentator said. Another commented that the “biggest thing affecting markets” is that “we’re coming in with an assumption that the global economy is slowing more” in 2015 than 2016. “We’re worried about China.” Another analyst told the Los Angeles Times that markets were “trading on fear that Chinese growth is going to collapse and that… lower oil prices are going to lead to a growing number of defaults in the high-yield bond market.” Those fears have been compounded by the fall in the price of Brent crude to below $35 per barrel for the first time since 2004, while the price of American crude hit its lowest point in seven years. The falling oil price feeds directly into energy markets via energy-based companies and into the high-yield or “junk” bond market, which saw an infusion of cheap money when oil was trading at more than $100 a barrel barely 18 months ago. The worsening situation in China is evidenced both in the economy and the financial system. Chinese growth is already down to its lowest levels in a quarter of a century, with manufacturing activity experiencing lower growth for five months in a row and exports down for each of the last 15 months. But a new cause for concern appeared on Wednesday with the news that the services sector had experienced its lowest growth for 17 months. The official policy of the Chinese government is that it is making a transition to a more service-based economy. Chinese stock market and financial turbulence, which rattled world markets in August last year, has also returned. On the first day of trading, markets were automatically shut down following a drop of almost 7 percent, as the date for the lifting of government restrictions on share trading imposed in August approached. As in the crisis five months ago, there are concerns about the stability of the Chinese currency, the renminbi. It has now reached its lowest point in five years, as the gap between its value in the more tightly controlled domestic market and the offshore market widens to record levels. The offshore value of the renminbi has dropped by more than 2 percent this week, recalling the events of August, when its surprise devaluation sent shock waves through world markets.