The Chinese economy will take off
While the Indian stock market suffered a terrible fall on Monday, the Chinese market, on the other hand, also saw a tremendous rise. In such a situation, the big question was: how suddenly is China’s stock market experiencing a historic rise? So the reason for this is the $142 billion booster dose that China’s economy is receiving. After all, what is this booster dose…?
China’s economy was already slowing down before Covid and the impact of Covid worsened its condition. In such a situation, China has offered a rescue package of $142.6 billion (around Rs 11.95 lakh crore) to breathe new life into the economy. Its effect is also visible in China’s stock market.
Liquidity will increase in the economy.
China’s central bank, the ‘People’s Bank of China’, has taken a big step to revive the economy. The size of money that the country’s banks must hold as reserves has been reduced. With this decision taken on Friday, the country’s banks will now have an additional amount of around $142.6 billion, which they will be able to invest in the market in the form of a loan or investment.
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With this step, China has set the goal of increasing the growth of the country’s economy this year. With this step, the Chinese economy is expected to grow by 5 percent. China’s central bank has decided to increase liquidity in the market at a time when just a day earlier, Chinese President Xi Jinping had indicated that some “new problems” are emerging in the world’s second largest economy ( China).
‘The World Factory’ will work again
This step will help China’s economy get back on track. China’s economic pace is also important for the entire global economy, because even today China is the “world’s factory” and an important link in the global supply chain.
The Chinese economy was stuck in the debt quagmire for a long time. The job of increasing China’s debt burden was done by the real estate sector, where there were more properties and the same credit burden in the economy as there was demand. China’s property situation is such that many ghost towns exist there today. Copies of the largest cities in the world and the 7 wonders of the world are also found in many places.
China’s stock market is booming
The direct impact of this step by China is visible in the country’s stock market. Investors have welcomed this move as it is expected to increase home purchasing. Not only this, the Shanghai and Hong Kong markets recorded the biggest gain in 16 years on Monday. China’s index of 300 blue-chip shares is up 30 percent since February.
While the CSI 300 index closed on Monday with a rise of 8.5 percent in a single day. At the same time, the market capitalization of the Shanghai Composite Index rose by $166.84 billion in one day and closed up 8.1 percent.
