Monetary Policy Report - 1st Quarter 2019

The current economic background

In the first quarter of 2019, it seems as if China and the U.S were making considerable progress in their negotiations for a trade deal, particularly regarding an enforcement mechanism to alleviate American concerns that the Chinese side would not follow up on promises. However, the unresolved international trade dispute made the global economy fragile and unstable. To offset the negative influence of a challenging global economic climate, the Chinese government has announced several economic stimulus measures, most notably including a VAT tax cut, and a reserve requirement ratio (RRR) reduction. Regardless of the relatively low GDP growth forecast, the Chinese stock market performed well in the first quarter of 2019. The GDP rose to 21.34 trillion in the first quarter, which corresponds to a year over year growth rate of 6.4%, exceeding expectations.

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