Solid Chinese Economic Growth For Five Decades, Then COVID-19
People on all sides of the pacific have been able to agree on one thing for the most part when it came to China until now. That being the Chinese economy has displayed positive growth every year for over fifty years. That is just about half of a century where there wasn’t a single unfavorable quarter. This all came to an end when China posted its most recent economic metrics.
The Economy and the Chinese Governments Response
The overall economy has posted its first contraction in the Peoples Republic of China. Their GDP shrank by nearly 6% in the last quarter. For a country that has gotten used to seeing GDP expansion of between 6-10% over the last decade every year including the financial crisis of 2008, this is a drop of nearly 20% compared to the past forecasts for the country. The CPC has moved on a number of actions to try and combat this growing recession.
Dropping the Interest Rates to Help Businesses Get Money
They have followed the lead of most of the world’s central banks and reduced their interest rates to make money less expensive to access for businesses and consumers.
Tax Reductions will Help
A number of tax cuts that have been created to put more money into the economy have been passed by the government similar to many western nations’ fiscal policy updates recently.
Creation of New Tax Credits
Finally, they have created a series of new tax credits that can be applied retroactively for businesses. This enables businesses to essentially get a raffle for money they have previously paid in taxes in previous years.
Chinese Stock Market Shows Positive Signs
There are a couple of pieces of good news in all of this negativity. The stock market in China has been showing some gains over the last couple of days. Also, the countries unemployment metrics have shown a slight decrease around one-third of a percent less than the previous month. Manufacturing output also saw a lower level of decline than state economists had predicted the previous month.