This fine tuning is not only necessary to generalize the growth of the economy, but to eliminate various risk factors that are latent and may lead to new episodes of stress to the economy. research. Despite 7.9% recorded by the Chinese GDP, deflation that observes the economy, shows clearly how weak is located. China Retail inflation index has observed an annual deflation of 1.7 per cent in June, and already accumulated five months of negative variance. The fall by the side of the price of the producers is much more pronounced and accumulating seven consecutive months of low, already shows a decrease of 7.8%. War by raw material seems to have been overshadowed against financial disaster originated in United States China is taking advantage of this global crisis and will be more strengthened than before: it will demand more and two key companies will accompany it on its growth Where is China investing your money now? All the details in our Global value of July report worried prices deflation risks it generates for borrowers by increasing its real interest rate.
He is also concerned about for companies who see reducing its profit margin, forcing them to lay off staff or to limit their investment projects, before the poor prospects for profitability and reduction of the flow of funds. In addition to deflationary fears, the possibility of the generation of a bubble with the prices of assets, is latent and is an issue that should be followed very carefully. Wang Qing, Morgan Stanley’s, stressing the need to maintain expansionary economic policy: the challenge for policy makers is that they should be careful not to a contractive bias anytime soon again. If the Chinese Government thinks that the crisis has already left behind and seeks not to stimulate economic growth, He would be making a serious mistake. I do not think that this is the view of the Chinese Government.
There are no financial constraints to continue with the expansionary fiscal policy. Although I understand that the Chinese Government will not remove support for the economy, since it has sufficient resources (mainly humans) to continue growing at double-digit rates, there are others who see some doubts about this. RBC Capital Markets, raised: now, that the efforts of the Government to boost growth have begun to work, see a greater uncertainty and disagreement in official circles about when is the right time to reverse course and remove the stimulus policy. Without a doubt, the capacity for growth of the Chinese economy should lead to the Government to maintain stimulus policies although changing its orientation towards a greater selectivity. In this it will show the carrying capacity of the authorities faced with extreme situations and demonstrate the true strength that has the economy. Meanwhile, from the Bank Popular China has begun with the fine tuning through credit policy. This recovery of the Chinese economy is producing through the stimulation of domestic demand given that exports are still affected by the crisis which has resulted in several sectors of the economy are still in trouble. While you create the opposite, China is still struggling to emerge from the crisis. Latent risks are many and serious, by which economic growth continues to show elements of fragility. You will need the help of the American economy to definitively overcome the crisis or will China break that external dependency?