China is confronted with a drop in financial reserves. Last month foreign-exchange reserves dropped way below forecasts. The reported drop was 15.89 billion dollars.
The drop is not significant. It does not compare to the drops recorded during the financial crisis.
The central bank moved to support the national currency, the Yuan. Chinese foreign exchange reserves have fallen to 3.185 trillion in August. That number is the lowest since 2011.
Even so, Chinese reserves are the largest in the world. Last year, Beijing devalued the national currency, which almost destabilized the second-largest economy of the world.
Declines have stagnated, as authorities increased capital control and closely intervened on forex trading.
Chester Liaw, an economist from Singapore, believes that the foreign exchange reserves have dropped because of the expenses of the G20 meeting, which recently took place in Beijing.
Nie Wen, an economist in Shanghai noted that the monthly drop should be regarded as normal.
Chinese officials are trying to create growth by re-orientating the economy towards the spending power of the 1.4 billion people, instead of the cheap exports and massive investments by the government.
Some economists say that these drops are normal, as China is making more investments overseas.
China has one of the largest economies in the world. It is a leading manufacturing hub and has the largest manufacturing sector worldwide. This socialist country also boasts the fastest growing consumer market. China exports many products but imports a lot of services.
It became part of the World Trade Organization in 2001 and has made free trade agreements with Australia, South Korea or New Zealand.
Some of the main Chinese industries are agriculture, construction, mining and manufacturing.
The economy started slowing down in recent months. This has been linked to production exceeding demand.
The slowdown took place in many regions and across basic industries like coal mining, steel and cement producing.
The main financial institution is the People’s Bank of China. It has 98 percent of the banking assets and it provides all the functions of other private banks. It has offices in several countries, and it runs development programs, especially in Africa.
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Image Source – Wikipedia