By stock market performance this week, mainland China has had the most issues to deal with among major world economies.
The Shanghai composite has fallen 7.6 percent over the last five trading days, making it the worst performer of the closely followed global indexes. While retail-investor-dominated mainland Chinese markets cannot be taken as a direct gauge on economic conditions, the volatility is important for global investors to consider as Beijing makes financial market reform a major policy objective.
Concerns about a slowing domestic economy — as Beijing tries to reduce reliance on debt-fueled growth — have hit investor sentiment on Chinese stocks, despite announcements of fiscal and monetary stimulus. Rising tensions with the U.S., the country's largest trade partner, and a weakening currency have also added to worries about growth.
"From a macroeconomic perspective, China's deleveraging efforts have not yet ended, and even though after the Politburo's mid-year meeting, macroeconomic policy focused on maintaining steady growth, the actual results have not yet been felt," Yongyuan Yao, researcher at Nanhua Futures, said in an email Friday, according to a CNBC translation.
"August macroeconomic data and also September sentiment indicators continued to decline. Without a clear response in the economy, it's difficult for the stock market to turn around and it has a greater tendency towards downside volatility," Yao said.
Worries about the economic impact from rising trade tensions between the world's two largest economies hit U.S. stocks last week while Chinese markets were closed for the "National Day" holiday. When the Shanghai composite reopened on Monday, it fell 3.7 percent.
The index steadied for two days but plunged 5.2 percent Thursday to a near four-year low. The decline followed the S&P 500's 3 percent drop as technology stocks fell and investors worried about rising rates. The U.S. benchmark fell another 2 percent in New York trading Thursday, bringing five-day losses to nearly 6 percent.
From a longer-term perspective, the mainland Chinese stocks have underperformed significantly. The S&P 500 is within 8 percent of its record, while the Shanghai composite is nearly 28 percent below its all-time high and is the third-worst performing global index compared to its most recent high. The worst by that metric is also China's — the Shenzhen A Share Index — followed by the Greece ATHEX Composite.