China is on everybody’s lips lately. Be it electronics and consumer goods companies, economists or politicians, they all have their reasons to keep a close watch on the Asian economic powerhouse. Projected to be the next big global superpower alongside its neighbor India, the country is currently going through slight turbulence.
Any developments in the Chinese economic situation is expected to have a widespread effect on a global scale. The slowdown experienced by the country in the past couple of years has got the market (including cryptocurrency sector) speculating about future implications. The economic slowdown was attributed to a number of factors, top one being the devaluation of Yuan. There have been predictions about yuan losing over 30 percent of its value in the coming months.
After a dismal performance, the Chinese currency and markets have shown some considerable gains today. According to a piece on of the business magazines, the displayed market trend is nothing out of the ordinary. However, given the size of the economy, the magnitude of these fluctuations seems to be huge. As the article states,
“the reality is much simpler — economic winds usually shift cyclically, not structurally”.
China has been going lengths to protect its economy from showing further signs of deterioration. In an unprecedented move, the Chinese government has also initiated legal action against the European Union and the United States of America for not abiding by the WTO agreement in recognizing its market economy. The legal action along with its strict capital controls and other regulations are expected to strengthen the government’s control over its economy both within and outside Chinese borders.
These changes have already started to show results. Many leading publications have reported the developments in the economy following last month’s economic stabilization. The country is also heavily invested in real estate and infrastructure projects across the world. These investments are expected to start generating returns in the coming years, by not just promoting trade but also as an instrument to strengthen diplomatic ties.
The Chinese economy may be moving at a slow pace at the moment but, it is not going to stay that way for long. These very conditions will also spell positive news for the cryptocurrency market in the country. People are already investing in Bitcoin to safeguard their earnings from being devalued. This has increased the demand, considerably increasing the price of the most popular digital currency. In due time, once yuan gains its ground, they will be able to liquidate their Bitcoin holdings at a much higher price.
Ref: WSJ | Express |Fortune | Shanghai Daily | Image: NewsBTC
