China's Moves to Boost Economic Growth are Still Useless?

Forex News

China is facing an economic slowdown driven by escalating trade tensions with the United States. China’s state media stated, that Chinese government must take strong stimulus measures to support growth, with the country in a "critical" period of stabilizing its economy.

China’s central bank recently announced a cut in the reserve ratio requirement (RRR) for most Chinese lenders, releasing 1.2 trillion yuan in liquidity for banks to lend and repay maturing loan facilities. Economists don’t think it will be the last measure announced by policymakers to boost economic growth. Further cuts to the RRR are widely expected, as well as additional fiscal stimulus and potentially a cut in official interest rates.

Still, Chinese yuan continues to weaken against the greenback, putting it on track to fall to the lowest level in a decade. Chinese shares also showed significant losses at the beginning of the week.

The International Monetary Fund (IMF) on Tuesday cut its growth forecasts for the United States and China, citing the recent waves of tariffs the world's top two economies have imposed on each other. China's growth is now expected to drop to 6.2% in 2019, from 6.6% this year. Meanwhile, China aims to expand its economy by around 6.5 percent in 2018. IMF economists also expect US growth to slow to 2.5% next year from 2.9% this year.