FX.co ★ Chinese recession

The Chinese economy was developing at the lowest rate for almost 25 years. According to released reports, economic growth in 2014 slowed down to 7.4%. The situation was worsened by a fall in demand for all goods from iron ore to fake branded bags. It is noteworthy that the country’s government says that at least 7% growth is needed for creation of jobs enough for vast Chinese population. The Communist party views social stability as the most crucial support of its power; that is why the decline has huge consequences for the authorities. However, the result was better than forecasts of analysts who expected a modest increase. Moreover, for the first time since 1995 the data turned out to be lower than government consensus. At the same time, statistics for retail sales, industrial output and investments was higher than expected. Experts consider the situation on the household market to be one of the domestic negative factors. Cost of square meters plummets for the fourth month in a row accompanied by bad loans on banks’ balance sheets. The world economy becomes more and more dependent on the Chinese growth. The slowdown in growth rates is happening in the situation when Europe is threatened by the third recession over the last six years, and when Abenomics failed to save Japan from contraction.