Monday, September 17, 2012

China's Economy

China's economy is a derivation of the demand driven economies in Europe and the U.S. As these economies have experienced declines, pressure on China to maintain a high growth rate has increased. At the same time, it has been worried about the steep growth in real property prices and a general trend toward inflation, direct results of the 2 decade export boom.  These price increases have landed squarely at the middle and lower classes, creating an explosive political situation. The Economist reports that for the first time, China is not acting as aggressively to pump prime its  economy, prefering instead to exploit the global slowdown as a way to cool expectations.  Additionally, it has moved quietly to reduce its exposure to global currency risk by increasing the share of reserves in renmingbi, effectively using its large trade surplus as a hedge.  In a year of messy political transitions, this is a pretty saavy two-step.

1 comment:

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