China becomes second largest economy: FX Chief

by Hitesh Anand on July 30, 2010

China has surpassed Japan to become second largest economy of the world.
Unprecedented growth of Chinese economy in past 30 years has made this country the true economic superpower of the world. Rampant growth in almost every sector of the economy and huge infrastructure and energy demand has made China an engine of growth for world economy.
China surpassed UK and France in 2005 and then Germany in 2007 to become the third largest economy of the world. China may well take over US as largest economy of the world by 2025 as predicted by World Bank, Goldman Sacs and many others. Being on number 1 spot will depend upon how Chinese government changes its exchange rates.
“China, in fact, is now already world’s second largest economy”, said Yi Yang, China’s chief currency regulator, in an interview with China reform magazine posted on website (www.safe.gov.cn) of his agency, the state administration of foreign exchange.
But still, China is a developing country. Chinese per capita GDP is $ 3,800 which is a fraction of the GDP of Japan, US and other developed economies. China’s growth, many argue, is unbalanced as Yuan is still largely undervalued. Chinese government is still not ready to make Yuan a global currency. Tight monetary policy may become hindrance to growth and a cause for instability of Chinese finance in future. Recent steps from Chinese government to let Yuan appreciate against major currencies of the world are the signs that Chinese government might be on the way to let ‘Yuan be pegged by free market’. Amalgamation of Chinese economy with other economies will be possible only when China allows full convertibility of Yuan. Chinese government holds a reserve of $2.45 Trillion and it plans to stick with this reserves which means Yuan will be pegged against Dollar for some time to come in future.

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US figures round up for Q2 2010-11

by Hitesh Anand on July 30, 2010

US Q2 GDP growth is expected to be 2.5% which is less than last quarter growth of 2.7%. Many economist fear that US economy is now stalled as it has been showing almost constant growth rate since past three quarter. This means US may be heading towards ‘Low Growth Trap’ if US government does not take proper steps to speed up the recovery. Japan has seen this phase of low growth and deflation with nearly zero interest rates for past 20 years. Federal Reserve Chairman Ben Bernanke has said last week that central bank may take further policy action if the world’s largest economy doesn’t continue to improve. Asian Stock fell today on expectations of weak US economic data.
Job market is still a dismal picture. Number of jobless claims in the week ending July 24, the advance figure for seasonally adjusted initial claims was 457000, a decrease of 11000 from the previous week’s claims but the company payroll rose only by 83000 in June which was less than economists’ expectations. Economy lost 125,000 jobs and unemployment dropped to 9.5% as discouraged workers dropped out of work force.
Inflation adjusted trade deficit stood at $ 45.1 Billion a month for the month of May-June. This was more than the previous month deficit of $42.3 Billion as imports increased faster than the exports.
Manufacturing sector is growing again as companies are increasing their inventories as world economic outlook improves further. Caterpillar, the world’s largest maker of construction equipment raised full year earnings forecast on higher demand from emerging economies. Rebuilding of stocks in warehouses has been the prime reason for the economic recovery in US as inventories were very low during the mid of worst economic crisis after World War II.
US economy has shown signs of recovery and seems to have dumped the fear of double dip but the labour and housing figures are the cause for the pessimism among the American. As the Euro Crisis settles down all the attention is back to the figures of US economy. Host of weak economic data in past few months has caused consumer spending to decrease. Consumer spending accounts for 70% of US economic activity.

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US dancing on grave now!!

October 1, 2009

After a controversial last post which I had to delete unfortunately, I am getting back to what I do best. I wanted to shift my attention to US as things seem to be getting brighter there as financial crisis is showing more and more signs of ending now. I am writing this blog after looking [...]

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Fast recovery may not be the way and slow hurts alot

August 24, 2009

This recession was the toughest phase of life, many ever saw and many more still going through it. All of us want that this slowdown should end as soon as possible. Economist say increased government spending is best way to infuse money into the system and increase demand. This method have been successful in past. [...]

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RBI and CSO data released shows decline in growth allover

January 19, 2009

Image via Wikipedia The number crunching game of economics is the only thing at boom in this recessionary atmosphere around the globe. Data is being analyzed rigorously in order to get some positive outcome but the more the data come out and more the analysis done, we get more hopeless results every time. Recently I [...]

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Disaster is waiting…be aware!!!

January 15, 2009

Image via Wikipedia Indian corporate world has been shaken miserably with the unfolding of the Satyam misgovernance case.This has set inquires by government over the bank accounts of other major business houses in India. Let me tell you what Raju did recently is being done all around the corporate world but only thing is Satyam [...]

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Indian Media:Irresponsible yet most effective

January 15, 2009

Image via Wikipedia Media is supposed to be the mirror of the society. It builds the consensus of a nation over which that nation grows and develops in its culture, dynamism and intellect. But in recent years Indian Television media has put forward such a agnostic picture of themselves that I fail to understand the [...]

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