Macro economic performance of china and
Simply put, the government has the technical ability to accommodate shifts in bank deposit preferences, even a modest bank run, without risking exchange rate collapse or runaway inflation.
The global downturn and the subsequent slowdown in demand did, however, severely affect the external sector and the current account surplus has continuously diminished since the financial crisis.
Domestic investment and rural development and green technologies The Chinese government has used some of the currency reserves to fund increased investment in rural areas of China to support living standards and development in some of the poorest parts of this vast country.
There are numerous challenges to overcome in the near and medium term.
The forthcoming second recapitalisation of SOBs since is the last one that China can afford. Just as in financial market liberalisation, capital account opening should also proceed gradually and in stages, because it must be accompanied by sophisticated financial market regulation, something that is clearly not in place at this time.
Inthe Chinese economy missed its 7. Even then, the danger of substituting financial crash for financial repression is still a real one. In fact, in the present deflationary atmosphere, a run from bank deposits to goods is a macroeconomically stabilising development!
China economic outlook 2019
The evidence overwhelmingly shows that the local bank branches, at least until , were unable to resist the demand for easy money. In the very first phase of rural industrialisation, the amount of capital needed to start a factory workshop was very low. The global downturn and the subsequent slowdown in demand did, however, severely affect the external sector and the current account surplus has continuously diminished since the financial crisis. The reduction in bureaucratic oversight of the SOEs in a soft budget environment allowed the SOEs to use creative accounting to privatise profits from good investment projects, and to receive state subsidies to cover losses from bad investment projects. Since the growth and inflation rates in the first half of were still substantially below their respective averages of 9. The interest rate has been reduced eight times in less then six years, with the latest rate cut on February 21st , which brought the one-year deposit rate to 1. Although the process is far from being completed, China has already established trade settlements with selected countries and launched a series of currency swap agreements with more than 20 central banks. However, the most efficient solution is for private investment rather than public investment to recycle the pool of private savings back into the economy.
based on 34 review