The interest rate cuts by the US Federal Reserve will not likely be strong enough to boost China’s economy, experts told CNA, but the moves could certainly help inspire confidence as China pushes ahead with new policies and measures.
SINGAPORE: At the heart of Shanghai’s bustling 'Ju Fu Chang' district - an area comprising the Julu, Fumin and Changle Roads in the Puxi neighbourhood - sits a trendy new bar inspired by The Beatles.
From architect and fashion designer to bar owners, Mr Daga and Ms Yiyi opened 'Strawberry Fields' in mid-September. “The main impact should be through Chinese policymakers finally unleashing more policy support in the aftermath of the Fed cut,” Mr Song said. “Lower interest rates tend to most directly benefit real estate due to the leveraged nature of the industry, while the impact on retail and manufacturing may be less direct.”for existing homes before the end of the month, a measure welcomed by experts who said it demonstrated policymakers’ resolution to turn things around.
And it’s pushing some individuals to make a move. Mr Stephen Mao, a 28-year-old office worker in Shanghai, plans on buying a modest house downtown for convenience. They rent a two-bedroom apartment in the city for 10,000 yuan a month, but are now contemplating relocating. The bar is in “a hotspot area for drinking”, Mr Daga added, but lamented that business is no longer what it used to be. “Even the well-known bars see very few customers on weekdays.”
While China’s central bank hasn’t mirrored the Fed’s aggressive stance in cutting rates, it has implemented a series of smaller cuts - including policy interest rate by 0.2 percentage points, and lower banks’ reserve requirements by half a percentage point.“PBOC policy decisions are not taken in a knee jerk reaction to US policy,” Mr Guppy said. “The impact of lower rates always increases consumer and business confidence because it lowers the cost of borrowing and debt servicing.
He also explained that China was “more insulated”, because of its relatively “closed” capital account, at least until 2015, which helped it experience fewer spillovers from international financial conditions. Under a closed capital account, companies and individuals cannot move money in and out of the country except in accordance with strict rules.
Mr Bell though thinks that China “should not be in a place where Fed moves matter much” but given the current economic circumstances, he concedes that “any international conditions” including Fed rate policy would have “a more salient impact on the Chinese economy”. “They are ‘pushing on a string,’ so to say. China is now almost a textbook case of Keynesian “aggregate demand deficiency” where monetary policy has become almost impotent,” he said.
Still, he is optimistic about the yuan’s trajectory, suggesting that the US rate cuts were “generally a positive story for the yuan and China’s capital markets.” Prudential Financial’s Mr Bell warns that without addressing underlying deflationary pressures, further rate cuts could exacerbate China’s bad-asset problem.
Singapore Latest News, Singapore Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Japan's remote Izu islands hit by small tsunami after magnitude 5.9 earthquakeTOKYO — Japan's remote Izu islands south of Tokyo were hit by a small tsunami on Tuesday (Sept 24) with no immediate reports of damage, after a magnitude-5.9 earthquake occurred near an unpopulated island farther south in the Pacific Ocean.
Read more »
Japan's remote Izu islands hit by small tsunami after 5.9 magnitude earthquakeTOKYO: Japan's remote Izu islands south of Tokyo were hit by a small tsunami on Tuesday (Sep 24) with no immediate reports of damage, after a 5.9 magnitude earthquake occurred near an unpopulated island farther south in the Pacific Ocean.
Read more »
Touring a small 999-year landed estate near an MRT station in Upper Bukit TimahLast week, we visited Cashew Terrace in D23 and I was very impressed by how expansive and accessible the area was (it is right next to an MRT station and only 1 stop away from various malls, but still quite peaceful.) Hence, when I saw that there was another, smaller estate across the road (Hazel Park Terrace) I thought it...
Read more »
Michelin-Listed Oyster Stall Explains Small Portion SizeThe owner of Huat Heng Fried Oyster, a Singapore Michelin Guide stall, clarifies that the small portion size of their cheapest oyster omelette ($5) is designed for elderly customers with smaller appetites.
Read more »
Whampoa hawker responds to criticism over small plate of fried oyster omeletteThe owner of a fried oyster omelette stall listed in the Singapore Michelin Guide has clarified that the small portion size of their cheapest option is in consideration of elderly customers.
Read more »
Small states need to join hands to uphold multilateral system in era of conflict: PM WongThe world is becoming a more dangerous place for small states, he says.
Read more »