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The new crisis may come from China

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The new wave of crisis could arrive from the East. In China, the same symptoms that occurred in the U.S. and Europe on the eve of the financial crisis of 2008-2009 are recorded. Together with the reports about the Asian giant's economic potential, increase the publications on China's economic exhaustion. Not surprisingly, Fitch notes that the Chinese banking system is out of control and under pressure, as borrowers have it difficult to refinance short-term debt. Experts confirm that Beijing has problems but said they have more tools to solve compared to developed countries. Lately China is seen as an engine of global economic growth. If the Asian giant's economy collapses, it will be an impetus for a new wave of the global crisis. Meanwhile, have reason for concern. Recently the Central Bank of China caused panic in the currency markets by restricting liquidity provision. This decision it shot last week interest rates on loans between financial institutions. The expert from the Russian Institute of Development, Nikita Maslennikov, said: - China's financial sector is going through a very difficult time. In the last two weeks is conjectured a liquidity crisis, causing that interbank interest rate for overnight lending in China has soared to more than 25%. Many observers came to compare the situation in the banking and financial sectors of the country to what happened in 2008 around U.S. bank Lehman Brothers. The Chinese government was quick to take steps to alleviate the situation by injecting liquidity into some financial institutions. But experts are convinced that this incident highlights systemic problems. In 2011 Chinese analysts recognize that the situation in the housing market in the country resembled the U.S. on the eve of the crisis. It not is the only symptom. The rapid growth led to many structural imbalances in the economy and the social sphere will take years to be adjusted. It is that economic growth for a long time had been relying on investment rather than consumption, says the expert of the Russian Academy of Sciences, Yákov Berguer: -This is the main problem of the Chinese economy - that growth rates remain high thanks to the money shots. But this leads to a variety of unpleasant consequences. One is the problem of excess production capacity." This "disease" has affected the construction industry, the steel industry and high technology. While growth model driven by credit is clearly  collapsing. But it is not the worst. The main resource of China, cheap labor, already does not provide many "dividends". The Chinese household incomes are growing and neighboring countries such as Indonesia and Vietnam are offering better prices to multinational companies. Since the crisis hit the enterprises of Asian giant have significantly decreased the volume of exports. Its main buyers - United States and Europe - are trying to encourage their own industry and consumption of domestic product. While Beijing, which should do the same thing, so far the moment has not advanced very much in this aspect. Although China is facing structural problems, also has more powerful anti-crisis tools compared to developed economies, believes the expert of the Russian Institute for world economics, Serguéi Afóntsev: -It is true that the Chinese economy is "overheated" and there is danger of the emergence of a housing bubble. But we all understand that the mechanism of decision-making in matters of economic policy in this Asian country is very different from what works in Europe and the U.S.. Beijing has a wide range of measures that allow you to keep the situation under control. Economists say that China's current problems do not have because go to the collapse. So far Beijing has managed to maintain high rates of growth despite the global crisis. But while analysts agree that the Chinese authorities should be "painful" reforms aimed, in particular, to reduce exports and develop domestic consumption. This will avoid a crisis but we have to forget about growth rates of 10% annually.

[caption id="" align="alignnone" width="460"]The new crisis may come from China Image: EPA[/caption] Source:
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