Five Economic Trends for China

Monetary Policy to be relaxed even further than 2011

2011 was a rough year for many businesses in China.  However, this year businesses are anticipating a bit of an easier time. The People’s Bank of China has already lowered the bank’s reserve twice this year signaling a more relaxed control of the money supply.  Add to that, the decline in the rate of economic growth suggest that further monetary loosening should be expected.

Reduction of Inflation

2011 the big problem was 2011 with the Chinese government doing everything in its power to keep it from blowing up.  But even though January’s CPI was more than expected, many experts are pretty confident that February and March numbers will show a reduction.

RMB losing momentum

Despite the whining from the politicians from the west, RMB has actually risen in value for past few years.  But signs are showing that RMB is losing some momentum.  This is mainly due to the global economy being in complete mess so the demand for China’s goods have reduced dramatically.  This may cause investors to start looking into other currencies in the FX market.

A better stock market

Most experts believed that the worst time has past for the stock market.  They believe the market have gotten used to the good news/bad news rotation coming out from Europe and the US.  Volatility has reduced and the prices have reached their bottom.  Many bankers are anticipating a pick up in stock investments by their clients.

Real estate is dead

Compared to the stock market, the real estate market is dryer than the Sahara desert.  Although property prices have not seen any further drop recently which would suggests that the market may have hit bottom, neither do people see prices going up any time soon.  The control put in place by the Chinese government have nearly put all the speculators out of business.