China is struggling to restore confidence in its currency as economic growth slows despite repeated rate cuts and Chinese citizens accumulate a record level of foreign-currency holdings.
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China’s economic growth rate slowed to a 25-year low of 6.9 per cent in 2015, reigniting worries about the health of the world’s second-largest economy.
For the October-December quarter, the world’s number two economy grew 6.8 per cent from a year earlier, down from 6.9 per cent in the third quarter and marked the economy’s weakest pace of expansion since early 2009, when growth tumbled to 6.2 per cent.
China does not intend to use a cheaper yuan as a way to boost exports and has the tools to keep the currency stable, Chinese Premier Li Keqiang said in a meeting with the president of the European Bank for Reconstruction and Development, state news agency Xinhua reported Saturday. That would be consistent with the Chinese government’s long-term growth predictions, which generally hew closely to official figures released by China’s National Bureau of Statistics.
Bloomberg Business News reported stocks took a dive at the start of 2016 amid investor concerns. But a huge overhang of unsold homes means the property sector remains uneven across the country and a full-blown recovery is not seen this year. “So I think they’ll need to be very close to that – 6.7 percent, 6.8 percent, 6.9 percent – in order to project the image that they want”.
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Policy advisers say the government could widen this year’s budget deficit to about 3 percent, the biggest in perhaps half a century, as leaders increase spending to support activity.
