Unless you are living under a rock, then you know that China is presently a heavyweight when it comes to matters of economy.
China’s economic growth has had an extraordinary impact on the rest of the world according to English CCTV news. As such, it doesn’t come as a surprise that there is constant and intense speculation about the country’s future.
Now although the country had a stormy time in 2015 and started 2016 in difficulty, some things are bound to shape its economy both in the long term.
What are we on about? Read on to find out.
The Country’s Economy is Still Growing
For most individuals, this is not news but there is so much alarm surrounding the country’s going slow, and as such, it is easy to disregard that its economy still beats most of the world.
Currently, China’s economy is under restructuring and things seem to be looking up as the IMF states that it anticipates witnessing healthy GDP growth soon.
As you consider that you may want to keep in mind that China’s development in one of its most turbulent years, which was 2015, was equal to Switzerland’s whole economy. Even when CCTV isn’t working, this is often very commendable, wouldn’t you agree?
Restructuring is Painful but Worthwhile
Did you know that China is transitioning to a domestic demand-driven economy from an external-driven one? According to the IMF, rebalancing from investment and manufacturing to consumption and services is necessary for the country’s economy.
This is so even with the slow growth rate in the short term according to CCTV news live English.
Of course, these changes affect the entire world and in particular neighboring Asian countries. This is because developing economies in these countries that depend more on manufacturing and investment are bound to lose out.
Conversely, those countries supplying consumers in China are more likely to win as the rebalancing takes place. This is according to CCTV news today.
The Yuan is Going to Experience More Pressure
CCTV news live today reported that in early 2016 when China experienced cash pouring out, most people speculated that it would only be a while before the government exhausted its foreign-exchange reserves hence leading to a huge depreciation.
What you probably did not know is that the Chinese government countered this by intervening both abroad and at home to sustain the yuan.
The same government also moved to constrict capital controls and the move worked in slowing down cash outflow ultimately getting the yuan to where it was initially.
However, the question remains whether this stability will hold up even when the US Federal Reserve rates rise again.
According to Fed chairman Janet Yellen, there is bound to be a rise in the rates shortly. In case it happens, China will be in a better position to resist the pressure.
The economy remains strong and extensive capital controls remain solid.
Debt Levels are Under Scrutiny
There is a rising concern regarding the speedy growth when it comes to China’s debt levels in the face of the global financial crisis.
The NAB Economics estimates the overall debts of the country at over 300% of GDP. With that, there is a possibility that a banking crisis may be experienced if particular banking assets turn bad.
Some specialists foresee parallels with Japan’s accumulation of bad loans in the past that had a lasting effect on the thriving economy.
Government Deficit Continues to Rising
During one National People’s Congress, Li Keqiang who was China’s Premier talked about a new five-year plan that included a likely government shortage of 2.18 trillion yuan for 2016. This reached a 3% deficit-to-GDP ratio.
This happened to be the highest since the People’s Republic was founded in 1949.
The Country has an Impending Demographic Problem
China’s working-age population continues to shrink while its elderly population continues to grow. If present trends are anything to go by, then by 2040, their choice just be two workers for each individual of working age. As seniors continue to outnumber the working population, the pressure on the younger population will continue to intensify according to CCTV quality standards.
The End of the One-Child Policy is a Life Saver
China announced that it was finally doing away with its one-child policy where citizens were only allowed to have one child. That marked the termination of a 37-year long restriction that hugely contributed to the country’s aging population.
Final Thoughts
China is a force to reckon with especially economically and this has nothing to do with CCTV settings. However, there are a few crucial facts you need to know about the country’s future with respect to the same. Keep the points we have discussed in mind especially if you plan on investing within the country.
