Sunday, January 1, 2017

What can China do not to collapse in 2017

Following the development on Chinese market it is possible we will see bigger pressure on a local economy to restructure, to cut off non-performing state companies or expensive production costs.

Possible scenarios:
a) depreciation of RMB to new values and using the advantage of it for the gathering of additional foreign currency and not allowing local companies to hold foreign currency

b) increase of the interest rate on the market with a motto: We want people to safe more, borrow less

c) continue monetary easing, what comes to point a)

d) open the regulation on job market and decrease the rights of the employees - as they are pretty high now

e) introduce a new tax code to tackle black money - extremely up to Indian solution

f) purchase the debt from the big banks - additional monetary easing (partly happening in 2016)

g) increase the minimal reserves on banks and thus to decrease lending

h) invest in new projects like railways and long connecting roads, like ChengDu - Silkroad or ChengDu Myanmar to get to Indian ocean

i) restrict more the outflow of the cash from China

j) IPO government owned companies and than partially buy bad debts

k) introduce new banknote - 1000 RMB

m) decrease amount of foreigners in the country

n) others

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