Published March 20, 2024
- Deputy central bank governor Xuan Changneng says Beijing’s monetary policies are ‘effective and obvious when compared with foreign central banks’
- Analysts say the PBOC is under pressure to clarify its comments in December about implementing flexible but accommodating monetary policy
A senior central bank official has hinted that China would not adopt Western-style quantitative easing, saying Beijing’s mix of liquidity tools and credit allocation is more effective in reflating the national economy.
“The pass-through effect of the [central bank’s] monetary policies is effective and obvious when compared with foreign central banks,” Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), said on Thursday without specifying any overseas agencies.
“The credit growth rate is also maintained at a level conducive to achieving our economic goals,” he added, citing that the PBOC has used its 45 trillion yuan (US$6.2 trillion) of assets to encourage 244 trillion yuan of commercial bank loans for the economy.
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SOURCE: www.scmp.com
RELATED: ‘Will China really become the world’s leading economic power?’
Published March 20, 2024
Economists are less and less certain that the Chinese economy can overtake the US, despite the promises of the Chinese Communist Party.
The tipping point in history is set, the curves are due to cross, and China will outpace the US to become the world’s leading economic power once again. But when? There was 2014, when China’s gross domestic product (GDP) expressed in purchasing power parity (PPP) overtook that of the US – the measure compares a selection of common goods and services from each economy to establish what it can buy, eliminating the impact of exchange rates. But in a world of trade, it is nominal GDP, converted into dollars, that measures the real weight of an economy in relation to others.
The drop in growth during the Covid-19 pandemic, followed by the real estate market crisis, have left China in a tough situation: high youth unemployment, low consumption by households worried about the future, and deflation. The fragility does not prevent major breakthroughs, such as electric vehicles. According to official statistics, the economy grew by 5.2% in 2023. According to the International Monetary Fund, GDP should reach $18,560 billion (around €17,026 billion) by the end of the year.
Meanwhile, the US economy which is coming out of inflation is still at the cutting edge of technology and benefits from low-cost energy as the world’s leading oil and gas producer. It has recorded a growth of 2.5% in 2023, with a GDP of $27,970 billion. This is a far cry from the years around 2010, when China recorded 8% to 10% growth, while the United States was in recession.
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SOURCE: www.lemonde.fr
RELATED: China: why the country’s economy has hit a wall – and what it plans to do about it
Published March 19, 2024
China’s annual parliamentary meetings in Beijing came to a close on March 11. They were conducted under great pressure: a weak economy and high expectations from both the domestic public and international observers as to what the government can do to get the economy out of the woods.
The country’s leaders did not shy away from mentioning all of the economic problems facing China. But they also attempted to boost the morale of the Chinese public by outlining how the country would march into the next chapter of the Chinese story – mainly by striving to become a global leader in technology.
The government used the meetings to declarethat it was targeting GDP growth of 5% in 2024. This is lower than the 5.2% growth rate that was achieved in 2023 but higher than the International Monetary Fund’s forecast of 4.6%. The Chinese government did not detail how this target will be achieved, but the target itself is indicative of the leadership’s confidence about the future.
Over the past four decades, China’s rapid economic growth has been attributed to market incentives, cheap labour, infrastructure investment, exports and foreign direct investment. But at the time of writing, none of these drivers are working effectively.
Market activities are intertwined with greater state intervention. A declining population has weakened the labour supply. And uncertainty surrounding China’s economy and intensified geopolitical tensions have together driven foreign investment out of China. By January 2024, inward foreign direct investment in China was less than 10% of the US$344 billion (£270 billion) it received in 2021.
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SOURCE: www.theconversation.com
