• China has cut stock trading taxes and urged state investment in an effort to revive its financial markets.
• This was in response to a property crisis, export deflation fears, and the Yuan’s plunge against the US dollar.
• The impact of these Chinese economic measures will have wide-ranging repercussions for global economies.
China Combats Struggling Financial Markets
China has taken decisive action to reanimate its ailing financial markets, by cutting stock trading taxes by half and urging state-owned banks and funds to invest in stocks. This move comes amid an intense property market crisis and growing export deflation fears.
Property Market Crisis Intensifies
The property market crisis has been particularly visible with the staggering 80% drop experienced by Evergrande in its first trading session for 17 months, according to the BBC . Furthermore, the Chinese Yuan has plunged to its lowest level against the US dollar this year, settling at 7.29.
Export Deflation Causes Widespread Concerns
A pivotal concern emerging from this situation is China’s export deflation which can potentially have severe repercussions for western economies as China is the top exporter for nearly 40 countries according to International Monetary Fund (IMF).
Impact on Global Economies Cannot be Overstated
The impact of these Chinese economic measures cannot be overstated given that they will affect numerous other economies across the world. According to IMF data, 40 countries rely heavily on China exports which demonstrates just how far reaching this issue is.
Chinese Economy Reaches Critical Juncture
The recent developments demonstrate that China’s economy has reached a critical juncture where decisive action must be taken in order to avoid further stagnation or even recessionary conditions across multiple sectors. It remains to be seen whether or not these steps will prove successful but it is clear that their effects will reverberate around the globe.