According to the Wall Street Journal, China’s economic growth is slowing down. Perhaps they will not be reaching their growth rate goal of 7.5% after all, or, at least, not without some degree of state intervention. Officials say that the central government would prefer to let market forces bring about the desired continuance of growth as they seek to establish their economy as a more stable market-oriented one. However, the government has a number of strategies available to them to spur on growth if necessary, including the PBOC’s cutting of bank reserve requirements, loosening of monetary policy, and more rapid infrastructure investment, to name a few.
According to Richard Silk, “China’s yuan currency has also fallen to its lowest level in a year,” and “Monday’s flash purchasing managers index from HSBC fell to an eight month low of 48.1 in March from February’s 48.5, with any figure below 50 showing a contraction in activity.” In response, China’s State Council declared it would, “quickly push out already-decided measures to expand domestic demand and stabilize growth, accelerate preparatory work and construction on major investment projects, and quickly spend funds allocated in the budget.” While the government may be engaging in stimulus-like behavior, it is avoiding admitting this. It remains to be seen if it will be pushed to engage in the same outright stimulus behavior of the past. At the end of the day, I think it will be willing to do so in the pursuit of its growth goal.