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China Announces US$200bn Chinese Stimulus Package

China Announces US$200bn Chinese Stimulus Package
Apr 20, 2015

Chinese stimulus package announced on Sunday in a plan to open up US$200bn for new lending. . This move comes after Chinese export data fell 14.8 per cent year-to-year in March, another sign of a slowdown in the country’s economy. The People’s Bank of China has also significantly reduced the amount of money that banks are required to hold on reserve in order to increase lending. Analysts are projecting that the government will also take further steps in the future to reduce interest rates while also reducing reserve requirements in an effort to reach the 7 per cent growth target for the year. Many experts are now questioning China’s ability to manage slower growth. A Goldman Sachs analyst said China faces “rising skepticism about the ability of the government to generate an economic recovery as it typically did in the past.”
 One rising issue with the country’s slowdown is the soaring shares market. The Shanghai Composite is up over 100 per cent in the last 12 months. But as the country slows, the monetary policies the Chinese government has at its disposal may not be adequate enough to spur growth. Analysts are noticing a trend where new liquidity in the market is being diverted to the stock exchanges, where risks are building as much of the shares market has been funded by borrowed money. As the diverted liquidly moves into the shares market, analysts at Goldman Sachs believe the only option is for the Chinese government to take a more aggressive approach to reforms. With the new US$200bn stimulus package, Goldman Sachs analysts believe the slowdown “marks a new stage in policy making with a more aggressive stance. We believe other loosening measures are likely to become more aggressive as well.”

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China continues its onslaught as it targets the wine industry

Treasury Wine Estate (ASX: TWE) shares slid approximately 15% yesterday when the China wine dumping investigation was announced.

Author: Trevor Hoey Aug 19, 2020

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