China's policy stimulus may worsen economic distortions - OECD


In its latest survey on the Chinese economy published on Tuesday, the Organization for Economic Co-operation and Development (OECD) highlighted the concerns over the Chinese stimulus measures to prop up the economic growth.

Key Findings:

“Infrastructure stimulus could lift growth over the projection horizon, but it could lead to a further build-up of imbalances and capital misallocation, and thereby weaker growth in the medium term,” 

“The stimulus risks increasing once again corporate sector indebtedness and, more generally, reversing progress in deleveraging,”

China’s corporate debt has fallen to about 160 percent of gross domestic product (GDP) due to a multi-year clampdown on riskier types of financing and debt, but the level was still higher than in other major economies, 

China’s fiscal stimulus could be as high as 4.25 percent of GDP this year, up from 2.94 percent in 2018, “

Ludger Schuknecht, Deputy Secretary-General of the OECD, noted that the easier monetary policy should help reduce the risk of liquidity strains which could put further pressure on businesses.

But he said Beijing should prevent any policy “overshooting”.

Fiscal policy should aim to support the economy while avoiding any side-effects,

“I’m sure government authorities and the PBOC are monitoring this carefully. It’s a matter of implementing it (stimulus) in the right way.” 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD retreats after strong NFP, weak German data

EUR/USD is trading below   1.11 after US Non-Farm Payrolls beat expectations with 266K and mixed wage growth. Earlier, weak German data weighed on the euro. Updates on trade are awaited.

EUR/USD News

GBP/USD shrugs off strong NFP, focuses on UK elections

GBP/USD is trading below 1.3150 but off the post-NFP lows. The US gained more jobs than expected. The Conservatives remain in the lead ahead of the debate between PM Johnson and Labour leader Corbyn.

GBP/USD News

US recession? Not so fast, a calm look at the economy and currencies ahead of the NFP

Recent US economic indicators have been downbeat, but they include silver linings and are backed by robust consumption. Valeria Bednarik, Joseph Trevisani, and Yohay Elam...

Read more

Gold drops to fresh multi-day lows on upbeat NFP report

Gold faded an intraday bullish spike to the $1480 area and tumbled to fresh multi-day lows, around the $1465 region in reaction to upbeat US monthly jobs report.

Gold News

USD/JPY: bearish ahead of US employment figures

Japanese data missed the market’s expectations, triggering fresh concerns about the economy. Focus on US employment figures, market players anticipate dismal numbers. USD/JPY is technically bearish could break below the 108.00 level.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures