The dragon fell down

“The data is a signal they need to do a little bit more in terms of restoring confidence and loosening policy,” says Andrew Batson, research director at Beijing-based economic consultancy GK Dragonomics.  The world is just sitting and waiting for the reaction of Beijing, the capital of the Dragon country, toward its flagging economy. The disappointing investments, trading, even the number of output decreases and finally a cut in bank reserve ratio lead to the bottoming of the dragon. 

China’s economy grew by 8.1 percent in the first quarter which is the lowest rate since 2009. The central Bank has reduced the bank reserve requirement. This requirement is set by the government. Any changes in the required percentage are used to influence credit conditions. An increased percentage requirement means fewer funds available for lending and a resultant rise in interest rates. In the first side, the disappointing trade number which decreases by 35% compared with the first quarter of the year. In what concern the imports, which were disappointing too, ups slightly just 0.3 percent in April. All Chinese imports from Taiwan, Hong Kong and Korea declined one year ago, these imports are processing components which strength the odd that the exports will decline more in the next months. The industrial output growth was 9.3 percent in April down from 11.9 in March. 

All these factors forecast a troubled economic growth for the Dragon because of all crises in the euro zone which give its harmful impacts on the Chinese markets and numbers show that the exports to the EU fell by 2.4 percent. The only good thing that we can note is the inflation which it was eased as expected to 3.4 percent in the last month comparing with 3.6 percent shown in March which prove the success of the monetary policy of Beijing, and of course the insistence of the Chinese government to boost a well-done monetary policy comes because they were worried about the local government debt.  

By Yassër Ben Hmouda

Posted in: All econimics