The former PBOC governor warned however that economic modelling could not factor in a quick shift in the mood within China.
“We saw when the Lehman Brothers event happened. There was sudden panic and contagion so this kind of thing is not very easy to analyze,” he said, before adding that with economic growth of 6 percent a year and a floating exchange rate, the Chinese economy was well placed to withstand external shocks.
Zhou said that while the trade war was a “major reason” for the stock slump, there was also some domestic reasons at play.
“The Chinese economy is facing a change of strategy from a fast urbanization process to a new form that needs to diversify from various state sectors,” Zhou said. “Also there is a lot of listed companies, that created pollution and investors are (now) not so friendly to these stocks.”
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