In the last few years’ Chinese
rapidly growing economy remains big threat for most of the giant economies of
the world. In last decade china made great progress and its economy groom very
rapidly leaving her competitors far behind. But it seems that this rapid growth
of Chinese economy is going to slowdown. There start appearing some signs which
are indicating the fact that the fast growing economy is now setting back and
facing some internal problems. In this article some very prominent signs of
slowing down the pace of Chinese economy are discussed
Here are the signs:
Cut in reserve requirement ratio (RRR)
After the first week of June
central bank of china announce a big cut in reserve requirement ration (RRR)
to make the liquid cash available for smooth running of the economic affairs.
This is a big sign which is indicating that now Chinese economy is facing some
problems internally and has to manage his problem by slowing down his economic
growth rate. In my opinion there are two big reasons which led the central bank
of china to take such step. One is ongoing economic recession and the second is
extra-large expenses on the development of infrastructure in the country.
Effect of recent crisis on Chinese economy
The slowdown of sales in market
is being observed world vide. It is due to the pullover trend of the customers
in the world. The reason is that due to present crisis everyone has to face cut
in his income and that is why he want to save money from unnecessary expenses.
This makes the customer conscious in going the market for purchasing products.
In short customer is reluctant in going to market and making expenses
frequently. This trend pull the manufacturers to decrease their production
which ultimately affecting the economy of the world. The same is the problem
with the economy of china in these days. In other words due to low demand of
products in the market the grower and manufacturer slowing their production
processes which ultimately decreasing the pace of growth of economy.
Effect of large scale development of infrastructure in the country
In last three or four years
Chinese government started big projects for the development of infrastructure
in the country. Very large amount of funds are required for the completion of
these projects which are shedding extra burden on the economy of the country.
No doubt these projects will open the ways of new horizons in making more
progress in future but at the present time these projects are hindering the
pace of growth of Chinese economy and the results are started appearing in the
form of various signals like cut in RRR.
Taking in view the above said
factors investors are getting surprise and they are reluctant for making investment
in the industries affiliated to the Chinese economy. They are observing the
slowing down pace of economy and thinking what can happen with this economy in
future. However in my opinion there is no need to be worry because the
government of china has started taking measures to check the slowing down pace
of their economic growth. Cut in (Reserve
Requirement Rate) RRR is one
such measure which will enable the industries and economy to work smoothly
without any hindrance.
Moreover the decrease in interest rate is another big step which
can increase the slowing down pace of economy. It is the basic rules of
economics that decrease in interest rate
make the entrepreneur easier to operate the industry freely. Moreover it also
stimulates the consumer to go the market and buy the product. In other words it
increases the scope of production and sales which generate the economic
activity in the country and finally affects the growth rate of economy. I hope
Chinese government will handle the potential economic crisis with batter
management of resources and planning.
However under the present
circumstances it is advisable to the investors to take care while investing
their money in the ongoing projects. Especially in the trade of currency
because currency trade is under continuous stress and yielding some drawbacks
in the market. Under these circumstances there are companies which are offering
their services to trade in commodities. It is batter to invest in commodities
rather than in any other kind of trade. One such company is b binary and they claim that trade with [b binary] for quick profits and
fast, easy withdrawals. Receive a 100% match bonus on your first deposit.
So feel free to contact such companies to make your trade more profitable.
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