Sunday, February 14, 2016

China’s Slumping Economy Puts Nations Forex Reserves In Trouble

Last year was not one of the best for the world's second largest economy. China faced a plethora of problems towards the end of last year. It all began early last year, when a sudden market crash panic had hit the financial news across the world. Chinese and foreign investors had begun a sudden buy back of all market shares and stock that existed, leaving the market in a turmoil which had forced the government to step in. The Chinese national government did not do much to placate the problem, instead, the national government on order of the central communist national party worsened the problem by imposing harsh measures and limits on the market further scaring away already skittish business investors.

China's slowdown

Until last year, China was the nation with the largest economic growth rate. It was followed by India in second place. However, last year, China lost the title to India for the fastest growing economy which it held for over a decade. The market quake shook up the global economy and had profound effects on global trade as well. All economies that were dependent on Chinese consumption and trade suffered some strong economic setbacks as well. Europe, which was one of the largest exporters to China found itself in a worrisome position after the drop in the Chinese economy.

China has implemented austerity measures to quite some extent, however, the official stance of the government and the nation is otherwise. The state controlled media claimed that the problem in the economy was a minor setback, and the situation is under control and is working perfectly well. The truth, however, is far from the official government stance. Due to the drop in the growth rate and numbers, Chinese Forex reserves have fallen to a three year low, adding further worries to the national economy and financial market mood.

Record Forex loses

The Bank of China had devalued the yuan in August last year in order to restore functionality of the skittish market and economy, however, that seems to have done more damage than good. The Chinese Forex reserves have fallen at the rate of more than 100 billion dollars per month in the past couple of months. The Bank of China reported December as the worst fall of Forex reserves in its history. The government lost a little over 107 billion dollars in Forex reserves.

China’s Slumping Economy Puts Nations Forex Reserves In Trouble Rating: 4.5 Posted by: Unknown


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