Chinese Economic Piles inviting US Contingencies
Since long, the news
that is heating the market is the global economic recession and the slowdown
observed in one of the emerging economic powers of the present world, China. Now,
after China has completed its elections and national political turmoil, people,
along with US, have already started making assumptions on forthcoming China’s
revival. On one hand, the status of employment in USA is not getting better even
after application of that many monetary measures and on the other hand, China,
which has been challenging US imports and exports, started to revive;
therefore, international politics definitely had to poke into.
In the post-electoral
session, when the government is newly elected, China will definitely try to
maintain its economic growth rate at 7.5 percent in the upcoming year basically
due to two reasons: to gain the confidence of the public and to fight back the
prolonging economic slowdown. The modest goal of 7.5 percent is set with an
objective to expand the fiscal and monetary easing. The growth in the
manufacturing sector showed up enough evidence that the economy is actually on
the way to making a comeback. This clarifies that the new leadership is trying
to be more accommodative with the growth rates and ensure a stable economic
growth. The RMB (Renminbi) has also shown a growth of 9.3 percent in nominal
terms whereas 12.6 percent in real terms against the dollar showing the signs
of economic recovery. Moreover, the GDP of China attaining the growth and
expanding by 7.7 percent is yet another measure showing the economic recovery
in China. The data released by the National Bureau of Statistics and Federation
of Logistics and Purchasing on 1st of December showed that the
manufacturing Purchasing Managers’ Index (PMI) of China rose to 50.6 in
November (PMI > 50, Economic Expansion).
USA has been lobbying
since long saying that China has undervalued its currency and has not been
helping to maintain the global economic growth. But, you may find it
contradictory now when the treasury department is changing the tone saying that
though the Yuan is undervalued significantly, China has not manipulated its
currency. USA has started arguing that the new government has reduced the
intervention and is stepping ahead to liberalize its control on capital
movements as a long term plan to establish a flexible exchange rate regime.
Moreover, the governor in Chinese Central Bank responded saying full
convertibility of their currency is their next step in repairing the
exchange-rate system.
Note: This article was published in The Himalayan Times Perspectives
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