Question

China Pours 9218 Billion Into the Economy as Growth Slows HONG KONG With the Chinese economy beginning the new year The central bank has made it clear that this wasn't freleasing on a decidedly downbeat note,consistentiy downbeat big, inefficient companies or ntO tone of the data released sine investment bubbles instéad of to the floodwaters by providing. ue stimulus comparable to Beijing's leaders are injectingthen will only have undertined thew more than $200 billion into ltsf strains the economy is facing, Mr. who need it more ward the smaler entrepreneurs introduced in 2009, hut it is clear, The cut will be good for curbthatthey are redoubing elforts to stabilize the economy and the cur nancial system to ease lending. The People's Bank of China onThis month, China will reportmg the economic Hriday said it wouid ct heconomie growth tigures for the solving the financi amount of cash that banks must last three months of 2018 While of enterprises said vu Yorn ng dificuitieseneyGeoftrey Yu the head of said Yu Yongting, the Swiss bank UBS, said in an hold as reserves by one percent china's headline growth figure is aneconomistat the ChineseAca e point. The move will essenwidely seen as unreliable, it tially free up Ls trillion Chinese dipped in the third quarter to 65ut this is just one policy Mrview thar there renminbi, or about $218 bilhon, for percent its lowest level of expan This swilt action supports our won't be a shap Yu added, saying it risks pouring deceleration in the Chinese econ periencing weaker sion since the aftermath of the factory outpat and consumer con global financial crisis. fidence while it weathers a trade war with the United States. , whjcn would do litom this yeir it that feers of a probmaor gobal slowdown are over money into real estate and the it weathers a trade The move by the central banktie to solve the economy's The cut is not unusual for Chi- on Friday appeared to be part of a coordinated effort Earlier in the nas central bank; but it comes amid uncertainty about how Bei jing will manage slower growth. lems. We need a lot of other poli- day, Et Keqiang, thecountry's pre mier, said China would move tocies to cooperate" shore up the econorny through (hrough For several weeks, economists 65% measures that included cutting and analystshave specúlated that push a bank reserve requirement ratiosofficials could move to cut its reserve requirement ratio keepby hal ecentage point by Jan 25. leewavtolend money,though ana-.move as asign China's expansion in the third quarter of 2018, its smallest since the aftermath of the financial crisis wouid give the flagging economy tin the arm Bit such bold The central bank said It would a measure of how much cash m deposits that lenders need to Oves have become increasingly the Chinese govern ditficult tor the Chi China's slowdown has contributed to shaky global financial markets fapercentage pointment which is contending with a huge debt load acoumulated over on Jan 15 and another half a the last decade to spur growth. raay underscoring the edly cut its sales forecast for ts latest quarter, citing disappoint ing iPhone sales in China, once one of its most vibrant markets. tI many analysts took the thatChina sleader impaet Apple unexpect The move will glve banks more lysts noted the net amount of would be pruactive in heading off any worsening slunp month to step up support of the economy, and they are facing new urgency. said Mark Williams. woud be roughly half the $218 bil lion heacdline figure, as the centrai bank shuts off other sources of funds. It also comes roughly a

Answer 1

1) China is injecting $218 billion in the economy because the growth in China has slowed down which has even resulted in a shaky global market crisis. The slowdown is because it has been experiencing week factory output and consumer confidence. One other reason is trade war with the united states.

The manufacturing sector has been experiencing weakness. Even apple cut its sales forecast for the latest quarter, reducing sales in the Chinese market. Also the exports of China has reduced because of the tariffs imposed by US.

2) the central bank of China,ie, People's bank of China reduced the reserve requirement by 1% which is almost equal to $218 billion. This money is now with the commercial banks who can lend this money to people thereby increasing the money supply in the economy. This is how China is putting funds in the economy.

3) injection of funds in the article is monetary policy as it deals with the supply of money and adjusting of interest rate by the central bank. Fiscal policy on the other hand deals with the government expenditure and taxes

4) the article also suggests fiscal policy as it talks about the government of China lowering taxes. This will lead to people holding more cash in hand and will have more purchasing power. This will also ease the negative impact of the high US tariffs on China's exports.

5) Keynesian economics deals with the government playing a major role by increasing government expenditure when the economy is facing recession. Increase in the government expenditure in infrastructure will lead the economy out of recession and act like an injection in the economy.

In the case of China, the monetary policy has been playing a key role but the government is reducing the taxes. This reduction in taxes means an increase in aggregate demand or production because now people will have more purchasing power. So the British economist JM Keynesian would certainly support this activity.