English | دری

China's inflation falls to 30 month low

in International Business

China's inflation falls to 30 month low

Chinese inflation dropped to its lowest in 30 months, to 1.8 per cent in July, following a rise of 2.2 per cent in June, opening up space for the government to stimulate the faltering economy.

The world’s second largest economy currently stands as the brightest spot on a bleak global map, amidst the Eurozone crisis and the struggles of the US economy. But China has had its share of troubles.

China’s economy grew at its slowest pace in three years in second quarter, prompting Wen Jiabao, the premier, to declare that the government’s priority was to support growth.

The central bank has cut its key interest rates twice since the start of June, taking the benchmark lending rate down to 6%. It has also cut the amount of money the country’s banks must keep in reserve, enabling them more money to lend to consumers and businesses.

It is anticipated that these measures will spur a recovery, and analysts are predicting stable conditions in the third quarter and a more remarkable upturn in the following one.

“This number gives more room for policy easing,” said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.

He added that the rate of inflation was “likely be below the official 4% per cent target for the year, so the policy focus for the government can stay clearly on growth”.

However, it is expected that Beijing will be much more cautious in their recovery plans, so as not  to launch a similar stimulus to that of 2009, where the spending binge pushed inflation and caused a surge in local government debts.


Tags assigned to this article:
China inflationChinese economy

Related Articles

Bank of Japan boosts stimulus to help revive growth

The Bank of Japan (BOJ) has boosted its key stimulus measure in an attempt to revive growth in the world’s

Chile’s Lan and Brazil’s Tam creating the World’s Second Biggest Airline

After two years of negotiation, Chile’s Lan airline finally completed a takeover of Brazil’s Tam. The merged airline company will

Asian stock markets rally after ECB debt plan

Asian markets join global rally, after the European Central Bank unveiled its plans of buying a potentially unlimited amount of

No comments

Write a comment
No Comments Yet! You can be first to comment this post!

Write a Comment

Your e-mail address will not be published.
Required fields are marked*

Time limit is exhausted. Please reload the CAPTCHA.