China’s Economy May Not Hold Out for Much Longer, Analysts Say
China's economy had long been the envy of many of its Asian neighbors and other countries in the world. However, there are suggestions that it may eventually hit rock bottom. If the trend is to continue, according to A Times, it will eventually stabilize around April or maybe even May. This is according to Sheng Songcheng, an adviser formerly associated with the People's Bank of China.
Sheng is of the persuasion that house prices going down is a good thing too. He also sees the positive behind restrictive real estate regulations and believes that, rather than easing up, they should remain steadfast in these policies.
Another analyst, Ding Shuang, shared his ideas and said that he didn't believe in the idea that significant inflation-or in this case, 'stagflation'-was going to happen. This is also against the policies that the central government is enacting. Inflation rates, in his view, won't dip any lower than the 2.5% to 3% that it's been in. Shuang believes if it goes any higher than 3% then it's likely time to call it a 'stagflation.'
China has been busy trying to stem the tide of the economic slowdown it's been experiencing. It has been trying measures such as cutting the amount of cash for lenders to reserves in order to release 800 billion yuan ($117 billion) of liquidity and to offset any restrictions on funding. Bloomberg reported, however, that China isn't stopping there. The People's Bank of China is seen to cut any reserve requirements by another '150 basis points.'
The loosening of these policies, according to analysts, will keep on an impaired course without any adjustments that could be imposing on things like local government financing, credit cycle expansion, and other demands on the property.
Beijing will also become aggressive in its stimulus packages. However, it will keep its stance in the property market, only deregulating restrictive policies for cities designated as tier-2 and tier-1 in the second quarter. It could even be later, suggested Lu Ting of Nomura.
Meanwhile, Zhu Haibin, JP Morgan's chief economist for China, said that these stimulus packages are meant to boost confidence in the market rather than anything else. The economist also said that the banks' business won't contract any further, enabling growth to finally start once again. It would also help a lot for total social financing's efforts to recover and, finally, rebound.