After two decades of economic growth and prosperity in China, the country has finally started to slow down. Countries that typically outsource to China are finding less expensive places to do business. Plus, China is not replenishing its population at a fast enough rate to replenish the workforce. Despite the slumping economy, China has found a way to increase their stocks to a seven-year high.
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At the beginning of April, China’s central bank hinted that they would do more to stimulate China’s slumping market. This caused stocks to soar over speculation of what’s to come. Zhou Xiaochuan, governor of the People’s Bank of China stated that interest rates could be slashed to promote business and regulations could also be loosened. He said, “Beijing needed to be vigilant to see if the disinflation trend will continue.”
China has a 7 percent growth target that they are struggling to meet this year. Last year Beijing loosened restrictions on money flows between Shanghai and Hong Kong. This caused Shanghai’s main index trading to its highest level in almost a decade. Similar legislation is expected this year to continue to boost China’s economy and keep the rate of their currency high.
Beijing carefully monitors the inflow and outflow of its currency to maintain control over its value. It is currently ranked seventh in the world. The loosened restrictions could eventually cause the currency to go down in value, impacting China’s economy further.
One thing that the country is trying to do to boost its economy is create a more modern Silk Road to Europe and Africa. This project is estimated between 300 to 400 billion yuan. China’s economy may be facing a slump, but they are making several moves to ensure the prosperity of their people and country as a whole. [/show_to]
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