China’s Economic Challenge

While others welcomed the year 2016 with the goal of starting over, one country‘s goal for the year is to prevent an economic decline.

The onset of the year has provided China with economic difficulty. This difficulty was brought about by two factors; the first is the weakening of the Chinese yuan and the second a reduction in China’s money supply. The weakening of the yuan can be traced to the strengthening of the United States dollar thus adding more deflationary pressure to the country.  Aside from the aforementioned factors, China’s factories have been producing products that haven’t left shelves, while the country’s apartment towers continue to remain vacant and this overabundance has been a contributor to the already present deflationary pressure the country is facing and has leaders planning to reduce the number of homes this year 2016.

There is also the possibility that China has relied heavily on investments, which has provided fuel for the country’s expanding economy. However, Chinese leaders are well aware that they cannot rely on debt and investments alone. China’s leaders do not have any intention to include spending measures in the plan to refuel the economy because of the fear that interfering in the country’s rate could do more harm than good for the economy.

The country recently approved a countermeasure economic plan this 2016 that was presented during the Central Economic Work Conference. The possibility of a stagnant growth has been the main topic of discussion and concern of the country’s top economists who all attended the conference. The approved plan will determine the tides for China’s economy and its success will determine of the country can make a rebound or will stuck in a stagnant state.