As of late, China is undergoing a heavy setback in terms of growth in the economic world. Beijing has not shown any promising news headlines since a long time now as far as stimulus is concerned and this is surely against the theories of some good market analysts.
After about two months of time since when the interest rates went down, the Chinese government is maintaining some safe measures so as not to reach a state as was in the years 2009 and 2010, when real estate costs were firing high. Wang Tao, the Chinese economist puts forward his belief that the government is playing cautious to avoid any history repeats.
The latest news from the manufacturing industry survey says that China has fallen down to 49 .2. A slump below 50, China’s economic condition suffered this huge contraction for the first time after 2011, in the late August. Even HSBC’s reports make it evident that small and medium rated companies in the industry has also suffered a low score of about 47.6 and 49.3.
Analysts have also said that China’s latest deterioration might be a signal for policy makers in banks to announce a reverse requirement ratio. This will enable them to give out more cash as loan.
Authorities are not watching the situation aimlessly. Projects are being sanctioned at a faster pace. However, analysts are predicting that Beijing must use more effective tools than this so as to avoid the same reverse ratio as was implemented during April this year.