![]() The Chinese Central Bank (POBC) has decided to relax solvency and capital requirements, recently reducing the reserve requirement ratio on its balance sheets by 50 basis points and thereby paving the way for its banks to offer greater financing to the country’s private economy, mainly in the form of mortgages. On the one hand, it is targeting its financial system, its banks, to be precise. It thus rose from the ashes before the rest of the rich Western world and has since decided to focus on two major monetary policy changes in the form of incentives to relaunch its economy. ![]() Conversely, the Chinese government is embarking on the introduction of new monetary stimuli to jumpstart its Chinese economy.Īs occurred with the Covid pandemic, China was the first country to be hit by economic instability. In the same vein, the European Central Bank and its members are discussing the amount to be withdrawn from its monthly cash injections. In recent weeks, we have seen how the US Federal Reserve has hastily pulled the plug on stimuli, with the much-feared “tapering” to control shocking inflation, which is already at 6.8% year-on-year, the highest level in 40 years. #SCHOOL OF DRAGONS EXPANSIONS WITHOUT MEMBERSHIP HOW TO#While the US and Europe are considering how to stop injecting money without financially strangling their economies and hiking interest rates, China is focused on the opposite: turning on the money-making machine to insert cash into the economy and expand liquidity. ![]() This means that the world’s major economic powerhouses are no longer aligned in monetary terms. However, China is not giving up the ghost and is applying the phrase “desperate times call for desperate measures.” China’s slowed growth, with a negative third quarter bringing in a meager increase of 4.9%, has fallen well short of its long-term historical average and this has had a knock-on effect on its stock markets. ![]()
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