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China Lowered Its Growth Forecast To 7%

ByAvaTrade
AuthorAvaTrade
Published 03/05/2015, 02:23 AM
Updated 02/02/2022, 05:40 AM

If you think that today’s lower growth forecast for the Chinese GDP was a surprise, then obviously you were not paying close attention to the economic data. What traders should focus is on the bigger picture and not should not be carried away with today’s headline. Therefore, the most crucial element to keep your focus is, on their monetary policy, and see if the PBOC of China is really putting their money where their mouth is.

The answer to that question is clearly yes, and the recent rate cut along with other easing measures are a clear evidence of their hard labour. Moreover, on the contrary, we think it works well, when you under promise and over deliver rather than the other way around. Hence, when it comes to markets, it is all about managing expectations, and the PBOC lowering their growth forecast on one end and easing their monetary policy is a strategy which will reap its fruit in the long term.

So, this is a new normal for the Chinese economy and market will have to digest this just like a new norm for the oil price is no longer at the $100 level. China is rebalancing their economy and this is a result of this therefore, the days of double digit growth are in the past for now.

Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.

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