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Chinese Government

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The stimulus plan was limited to give an upward blow to domestic demand without greater interest in its continuity. Does not seem to be the intention of the Chinese Government to generate a change in the habits of consumption and savings of the population. Andy Xie, analyst who closely follows the evolution of the economy, says without hesitation: China is not changing its model of growth. Exhausted the stimulus plan without the global economy (and mainly, the US) have been recovered, China faces a real problem to sustain its pace of growth. For this reason, Wen Jiabao went to reassure markets by ensuring that the Government will maintain the policy of encouragement: we must maintain the continuity and consistency in macroeconomic policies, and our main priority remains to keep a stable and fairly rapid economic growth.

This means that we can not give us the luxury of the lower relaxation or doubt. In the midst of the difficulties of china’s economy to be able to sustain at least close to 8% economic growth, of the Banking Regulatory Commission has decided to increase capital requirements (by reducing subordinated debt that can be posted to that end), impacting this way in the ability of the financial system to generate credit. This increase in capital requirements acts by limiting the multiplier effect of each yuan of capital on the generation of credit. Sheng Nan, analyst at UOB Kayhian Investment Co. in Shanghai: this decision will reduce one of the major sources of funding for banks. The Government’s aim is reach a floor of the 8% growth in GDP, but will it be enough? Increase the pressures for greater growth and 8% seems to be insufficient. According to the China Daily Government: the imbalance between supply and demand (of jobs) will become something superior to thing of last year due to the failure to create sufficient employment opportunities.


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