capital-intensive industry

Recent monetary measures signaled the central bank’s intention to lower financial costs for the private sector and to restore investment trend.,christian louboutin




Though rate cuts will likely contribute to capital outflow, but the size should be limited. Due to the de-leveraging across the United States, and the rebalancing of investment portfolios by many institutional investors, capital outflow is inevitable. But this is a healthy adjustment so that China is able to ease external imbalance. The key to dealing with capital outflow is to ensure liquidity in the nearly US$ 2 trillion in foreign exchange reserves.



To deal with the challenge, Beijing has to consider using fiscal policy to stimulate domestic consumption. As long as domestic demand can be elevated, it only takes time for investment to come back.




From Caijing Online
Compared to the interest rate cut of 108 basis points on November 26, this cut of 27 basis points is mild. But it indicates that the central bank will adopt a more loosened monetary policy in order to prevent deflation and stabilize market confidence over the economy. Thus, it is very much likely that Beijing will rule out dramatic rate cuts in the foreseeable future.






China further cut interest rates and lowered the required reserve ratio for commercial banks on December 22, sending a clear message to bolster investment and economic growth for 2009.
By Caijing Chief Economist Shen Minggao
Coming at year end, the government’s choice to reduce interest rates will help commercial banks to plan on credit lending as soon as they can for 2009. The new policy also facilitates the “four-trillion yuan” economic stimulus package.
Adding even more liquidity to commercial banks, the central bank at the same time reduced the required reserve ratio (RRR) for major banks by 50 basis points to a level of 15.5 percent. This marks the fourth adjustment this year of the RRR.


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Beijing cut interest rates for the fifth time this year,ralph lauren pas cher, completely erased the effect of the tight monetary policy launched in the past two years. Room for further cuts is diminishing.


From previous experience, cutting interest rates signals a gradual deterioration in market confidence. With an increasing number of rate cuts,polo ralph lauren, the accumulated impact of loosening monetary policy will only emerge gradually. There is still room for more interest rate cut in China. However,louboutin, because interest rates are at their lowest since the Asian Financial Crisis, the room for further aggressive cuts has been constrained.

The People’s Bank of China,louboutin pas cher, the central bank of China, cut interest rates for the fifth time this year, lowering the benchmark one-year lending and deposit rates by 27 basis points to 5.31 percent and 2.25 percent, respectively. This marks the lowest interest rate for loans since the Asian financial crisis of 1997 and brings an end to Beijing’s tightened monetary policy.

According to data, yuan-denominated credit lending picked up slightly in November,polo ralph lauren pas cher, but the monetary supply grew slower. This distressed economy has yet to turn around. A loosened monetary policy perhaps will insert a positive impact on stabling economic activities for some sectors and industries, such as real estate, capital-intensive industry, and consumer industry.

The Chinese central bank is wrestling with a totally different environment from a couple of months ago. Thus,christian louboutin pas cher, cutting interest rates came as a positive response to the change in environment. Since both product price index (PPI) and consumer price index (CPI) have recently fallen steeply, the price movement has paved the way for the central bank to cut interest rates. In addition, commodity prices on the international markets continue to decline. The Federal Reserve reduced the base rate to 0.25 percent, nearly zero. The entire world, including China,franklin and marshall, is pressured to fight deflation.

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