China’s economy is booming despite its humiliating foray into tainted food and other hazardous stuff. In the last three months, country’s foreign reserve has added an overwhelming $266.3 billion, which pushed the total reserve to a record $1.33 trillion.
Country’s healthy trade flow has increased to a record high that contributed to acceleration in money supply growth in June. China’s trade is also rolling swiftly as its trade surplus has surged by 85.5 percent or $26.91 billion in June.
Analysts assert that the foreign reserve acceleration can intensify the pressure on the Yuan, as it’s already getting pressure from the American lawmakers to lift the unnecessary import duties.
Chinese policymakers are satisfied with the growth and hopeful for the prosper future as Cheng Manjiang, an economist with Bank of China International in Beijing said:
The figures are totally in line with expectations because the trade surplus surged very rapidly and we also expected FDI (foreign direct investment) to have been good
The country’s reserves have ballooned in recent years as the central bank, in order to hold down the Yuan, has bought most of the dollars generated by a growing trade surplus, inflows of foreign direct investment and speculative capital.
China’s economy is on threshold, where it is receiving maximum inflow of capital, apparently lured by its future growth, market potential and cheap labor. To check the vicious part of foreign reserve Chinese government has taken a premature step by raising interest rates twice.
Annual loan growth is galloping as it rose to 16.25 percent in June from 16.0 in May, while new Yuan loans reached 2.54 trillion in the first six months versus 3.2 trillion. Keeping all these aspects in mind, economists are expecting another interest hike in the coming months.
Via: IHT
