China Will Respond to Economic Weakness

The Chinese government has recently responded to the weakening economy by imposing a currency devaluation (which makes it cheaper for other countries to buy Chinese goods, which helps spur Chinese growth) and even preventing existing stocks from trading on the stock market (to prevent further stock declines).

Nonetheless, Chinese stocks are down nearly 40% since June. In response, China is expected to send cash across its banking system to spur growth (through reducing the amount of cash banks are supposed to hold in reserve – or in safekeeping – which would encourage banks to loan the extra cash out).

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