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China's Economy Struggles despite Efforts to Stabilize Yuan and Boost Exports
The Chinese economy has yet to recover well after moving away from the zero-covid policy. The country is constantly struggling to recover its economic condition. Meanwhile, China’s currency, the yuan, has fallen to its lowest level in 16 years against the US dollar.
In a report, Economic Times said that China’s central bank is making various efforts to keep China’s economy running. However, despite the continued efforts of the People’s Bank of China, the price of the Chinese currency yuan against the dollar has fallen to its lowest level in the last 16 years.
On Thursday (September 7-2024), the price of the yuan against the dollar was 7.32. The last time the Chinese currency depreciated against the dollar was in December 2007. At that time, the price of the yuan against the dollar fell to 7.35.
Chinese economists have also expressed fears that the country’s money may go abroad due to the depreciation of the yuan. Wang Tao, head of UBS Bank’s China economics department, said the yuan could be 7.15 against the dollar by the end of the year. And this year, China’s exports may decrease by 5 percent.
Meanwhile, in a report citing Chinese government data, the BBC said that the amount of imports and exports in China decreased in August this year. With this, the country’s exports are decreasing for four consecutive months. In August this year, compared to the same period last year, China’s exports decreased by 8.8 percent. And imports decreased by 7.3 percent.
However, although the country’s import-export volume has decreased, it is at a somewhat comfortable level compared to last July. China’s exports fell 14.5 percent in July, the steepest rate of decline since February 2022.
Along with exports, import demand in the country also fell in July. Imports fell by around 12.5 percent in July. At that time, the chief economist of the Chinese company Pinpoint Asset Management, Zheng Zhiyu, said that the demand for products in the country’s market has decreased compared to before. Due to this, the amount of import is decreasing.
Meanwhile, China’s central bank cut a key interest rate for the second time in three months in August this year to keep the country’s economy strong. The PBOC cut the one-year prime lending rate to 3.45 percent from 3.55 percent, the second change in three months, the BBC reported.
But the five-year mortgage rate remained unchanged at 4.2 percent, surprising economic analysts. Earlier, economists in a Reuters poll said that the central bank may cut both interest rates.
