The second biggest economy of the world is showing signs which indicate that China is gradually reaching a level of stabilization. The most recent economic indications, point to an improvement of its growth rate as yearly retail sales up to the month of August have jumped, reaching values of 10.60% from previous month’s 10.20%. A major contributor of the Gross Domestic Product that reflects on consumer spending to which present-day is driving the economy for significant large global economies. China initially forecasted a growth rate of 7.00% for the year of 2015 but then cut expectations for 2016 down to 6.50%, as slow global growth appears imminent. The most up to date growth rate for the current year was reported at 6.70% having the value appear in line with late forecasted expectations. A rise in retail sales could actually keep the rate stable, if not lift it only slightly, while other recent economic indications emerge favorable that could actually have GDP forced to the upside as an improvement in industrial production as well as trade balance figures have been reported.
After a turbulent start of the current year in financial markets, notable over the first quarter, over China’s economy and its transition from a manufacturer to a service provider, the nation is gradually reaching its stabilization point lifting pressures for the People’s Bank of China. Policies have been harsh with rates slashed from 7.50% down to record lows of 4.35% ever since the global financial crisis in 2008 occurred, while moving in parallel was the cut of the required reserve ratio from 21.50% down to 17% that commenced in the second half of 2011. Eight years later, the intentions of the central bank may appear to see a light at the end of the tunnel while at the same time relieving any more stimulus required. The Chinese Yuan has weakened against the US dollar over the years, even if the PBOC has interfered to stabilize its currency, with a price reached at 6.6854 on the shoulders of the data released.
China’s stability materializing
Market Trends - 13/09/2016