Why China is grappling with falling prices – and being compared to Japan
Al JazeeraAug 06, 2023
The Facts
On Friday, China announced a series of economic measures as it looks to combat a struggling property market and support a weakening yuan. China’s central bank cut the amount of foreign exchange reserve funds institutions must hold while large banks cut interest rates.
The People’s Bank of China (PBOC) announced that the reserve requirement ratio (RRR) for foreign exchange deposits will be cut from 6% to 4% on Sept. 15, in a widely anticipated move that will allow banks to lend more money and cut down on bets against the yuan’s value.
The Spin
Pro-China narrative
Contrary to the prevailing anti-China narrative emanating from the West, China’s economy is far stronger than most think, and Beijing’s forceful actions are helping China along in its recovery from the pandemic. The issues facing China’s property sector have been greatly exaggerated, and policy tweaks will allow for robust home ownership and an uptick in consumer sentiment. China’s economy is on the right path, and its best days still lay ahead.
Anti-China narrative
China is in the midst of a full-blown property crisis that will have a profound impact on its entire economy. China’s property sector played a big role in the country’s ascent over the past few decades, but it has slowly been declining as individual homebuyers and large developers alike struggle to make payments. China’s systemic issues have created this crisis, and it is unlikely that a few policy tweaks will make this problem go away.