Fiscal And Monetary Reforms Underway In China

Posted by: : Paul EbelingPosted on: April 5, 2015 Fiscal And Monetary Reforms Underway In China

Fiscal And Monetary Reforms Underway In China

China’s considerable fiscal and external buffers provide time for structural reforms to gain traction, global rating agency Moody’s Investors Service said last Thursday.

“Fiscal and monetary reforms are underway. But the fundamental restructuring and rebalancing process will be a multi-year endeavor, extending into 2-H of this decade,” Moody’s said in a report.

Following the global financial crisis, China’s economic growth has slowed and systemic leverage has risen, casting a shadow on China’s economic prospects. During the annual session of the National People’s Congress, China’s top legislature, in March, Premier Li Keqiang pledged a “new normal” of slower and sustainable economic growth, it noted.

The Chinese economy posted a 7.4% growth in Y 2014, its weakest since Y 1990. The annual growth target set by the government was lowered to around 7% for Y 2015, but more stress was laid on better-quality growth.

Moody’s predicted that China’s real GDP (gross domestic product) growth will continue to slow into a 6.5-7.0% range this year and next, while inflation remains in a low and single-digit range. This assumes targeted policy measures will continue to cushion downward macroeconomic effects caused by the reining in of credit.

Southside risks for the economy are reflected in local government liabilities, property sector weaknesses, industrial overcapacity and state-owned enterprise debt, according to the report.

China’s fast economic growth in past years relied to a large extent on foreign investments (FDIs) and credit expansion.

Have a terrific week.


Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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