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China's economic policy 'wise'

Updated: 2013-07-29 09:16

gdpbull (the United States): China is wise not to follow the west's example, which is to implement a loose monetary policy when times are good and bad. The western central banks buckle to the banking industry and political pressure to provide liquidity at all times, whenever a bank needs it or at any hint of an interbank lending liquidity crunch. So why should western banks care about good management? The central bank of China is rightly worried about excess credit. And they seem to be managing it in a sensible way. Their plan is to tighten, then loosen back a bit, tighten, loosen, but the overall trend will be tightening and forcing banks to become more responsible. If they stick to it, they will avoid a crisis. The restructuring may be more difficult, but it will help their long term economic prognosis.

SDIvester (Singapore): Although China looks to be enveloped in a holding pattern with its economy proceeding to face its fourth consecutive under-performing year, it does seem that the country's economy has paused in terms of growth. If we consider the situation in the year 2010, the nation's gross domestic product grew 10.4%. The condition today is a far cry from the scenario at that time; China having been staring at stalling GDP growth in the last two years; viz. in 2011 and 2012.

In Market Watch dated April 15, 2013, there was an article by Kumar P titled "JPMorgan cuts China 2013 GDP view to 7.8%." So if we assume that the probable GDP growth will be 7.8%, while the previously estimated growth was 8.2%, it does look like the lackluster growth will continue in the Chinese economy. The country's two leaders seem determined to solve the ongoing crisis by employing policies both monetary and fiscal to bring it on the path to recovery. After all, China holds foreign reserves to the tune of above $3.0 trillion and is thus in a better financial situation than many of its industrialized peers in the world.

All the information is from China Daily Forum.