China’s latest economic stimulus package is sending big ripples through global markets. The financial system is poised for an influx of liquidity following a series of bold actions by the People’s Bank of China (PBOC), including lowering banks’ reserve requirement ratio (RRR) and cutting the key repo rate. .
The aim is to inject $140 billion into the economy and boost lending to stimulate growth. Furthermore, Reuters reported that China plans to issue 2 trillion yuan (approximately $284 billion) in special government bonds this year to boost consumer spending.
But Nick Collas, co-founder of DataTrek Research, warned of the challenges posed by the Chinese government’s approach. Speaking on the Bloomberg Surveillance podcast, he pointed out that while there are many different monetary and fiscal policies, there are conflicting views among government regulators.
They want to improve the economy, but are reluctant to give back too much power to the wealthy and corporations.
“And that tension is really damaging investor sentiment in the Chinese stock market,” Collas said on the podcast.
Colas emphasized that this tension is having a negative impact on investor sentiment in the Chinese stock market.
Also read: China’s stimulus fuels optimism: 3 large-cap stocks that analysts rate as buys
Mr. Colas also drew comparisons between China and the United States in terms of resilience. He said America is inherently psychologically “anti-fragile.”
“Americans are very optimistic people. They don’t worry about making mistakes, and at least in business, they don’t criticize people who fail,” Collas said on the Bloomberg Surveillance Podcast. Ta.
He said American society tolerates “second and third acts” and emphasized the cultural tendency to bounce back from setbacks.
When asked about China’s anti-fragility, Colas acknowledged that China’s vulnerabilities exist, but not to the same extent as the United States. He noted that Americans’ unique ability to bounce back from mistakes, whether in business or politics, is what sets the United States apart worldwide. This resilience, he concluded, is a hallmark of American exceptionalism.
A recent report from Bloomberg shows that a growing group of prominent Chinese economists, including former central bank governor Yi Gang, are warning of the need to boost demand to prevent China from falling into a deflationary spiral. He emphasized that.
Companies caught up in intense price competition are laying off workers and university graduates are facing job shortages, leading to youth unemployment reaching record levels last month, a report says. states.
The new multifaceted policy package boosted the stock market, but did little to address the fundamental issues affecting China’s long-term economic prospects.
Read next:
Market news and data powered by Benzinga API
© 2024 Benzinga.com. Benzinga does not provide investment advice. Unauthorized reproduction is prohibited.
