Global Perspective on Chinese Economy
November 20th, 2009
Hammad Khalid asked:
On February 4, 2008, the World Bank issued a Quarterly report on the Chinese economical situation, pointing out a high growth in early 2007, apparently setting a record among all developing economies around the world, however, by the start of 2008, China’s economical growth started to go little bit sluggish, and a rise in food prices pushed the inflation level to a new hike. In the fourth quarter of 2007, the growth slack was mainly caused by an exterior recession in demand which caused a rise in net import factor. With food price’s rising impetus in December 2007, the currency inflation rate climbed to a 7.6%, in the mean time the total demand surplus could have been another reason in inducing a comprehensive inflation. ??
The bank’s “Quarterly report” indicates that the attenuated global economic prospect which has appeared recently has some uncertainties, and in 2008 the Chinese economy would still be maintaining a strong growth rate while promoting a demand helpful for its global growth.
World Bank’s China Bureau Chief Mr. Du Da Wei said: ” Although the global economic growth will be on a hold and it might would affect China’s export as well as the trade department’s investment, but the domestic demand should maintain an exuberant tendency, and this kind of global economic defer will be helpful in balancing the Chinese economy. “
The World Bank forecasts that by the end of 2008, China’s GDP will have a stable growth rate of 9.6%. Since the prospect uncertainty requires vigilance of the financial institutions’ considering flexibility in strategy, even if the global economic growth slows down, under a strong macro economic crisis situation, China will opt to regulate the credit controls and demand promotion through relaxation in financial policy. The report pointed out that the macroeconomic policy needs to solve the remuneration factor that continuously exists in inflation scenario. By the mid of 2008, the overall price hike pressure would be alleviated to some extent. China’s monetary policy will continue to depend upon the credit control and the flow management.
The RMB will continue to grow stronger and it might push the USD down to few points by the end of 2008, which will be helpful in reducing the inflation pressure. Although the Chinese government has adopted financial policy to suppress the rise in price and price stability on long term basis, but in the long run, these measures will produce adverse effects which will possibly surpass the advantage that it will bring. In view of the fact that China has strong pecuniary conditions, the authorities may consider some substitutes for certain price control methods with special direct grants and a balance economic growth to ensure foreign exchange’s domestic stability.
On February 4, 2008, the World Bank issued a Quarterly report on the Chinese economical situation, pointing out a high growth in early 2007, apparently setting a record among all developing economies around the world, however, by the start of 2008, China’s economical growth started to go little bit sluggish, and a rise in food prices pushed the inflation level to a new hike. In the fourth quarter of 2007, the growth slack was mainly caused by an exterior recession in demand which caused a rise in net import factor. With food price’s rising impetus in December 2007, the currency inflation rate climbed to a 7.6%, in the mean time the total demand surplus could have been another reason in inducing a comprehensive inflation. ??
The bank’s “Quarterly report” indicates that the attenuated global economic prospect which has appeared recently has some uncertainties, and in 2008 the Chinese economy would still be maintaining a strong growth rate while promoting a demand helpful for its global growth.
World Bank’s China Bureau Chief Mr. Du Da Wei said: ” Although the global economic growth will be on a hold and it might would affect China’s export as well as the trade department’s investment, but the domestic demand should maintain an exuberant tendency, and this kind of global economic defer will be helpful in balancing the Chinese economy. “
The World Bank forecasts that by the end of 2008, China’s GDP will have a stable growth rate of 9.6%. Since the prospect uncertainty requires vigilance of the financial institutions’ considering flexibility in strategy, even if the global economic growth slows down, under a strong macro economic crisis situation, China will opt to regulate the credit controls and demand promotion through relaxation in financial policy. The report pointed out that the macroeconomic policy needs to solve the remuneration factor that continuously exists in inflation scenario. By the mid of 2008, the overall price hike pressure would be alleviated to some extent. China’s monetary policy will continue to depend upon the credit control and the flow management.
The RMB will continue to grow stronger and it might push the USD down to few points by the end of 2008, which will be helpful in reducing the inflation pressure. Although the Chinese government has adopted financial policy to suppress the rise in price and price stability on long term basis, but in the long run, these measures will produce adverse effects which will possibly surpass the advantage that it will bring. In view of the fact that China has strong pecuniary conditions, the authorities may consider some substitutes for certain price control methods with special direct grants and a balance economic growth to ensure foreign exchange’s domestic stability.