Guidelines for Major Economies: China

Welcome to the stage of a great country, China!

If your understanding of China is limited to being the most populous country in the world and the Great Wall, then you need to read on well.

China since BC221Nian is a unified country ruled by Qin. But at that time, the chubby panda was not a master of kung fu, at least we didn't think it was. Since then, many dynasties have emerged, until1949The People's Republic of China was established in.

It was not until recently that China emerged as a recognized major power in the world. It has world-class cities, Olympic champions and delicious Dim sum. Besides being Yao Ming's hometown, China is also the third country to send astronauts into space.

From sports to space travel, to economic capabilities, China is gradually improving its position on the rankings.

China: Facts, Data, and Characteristics

• Neighbors: South Korea, North Korea, Mongolia, India, Japan, Russia
• Area:96010000 square kilometers
• Population:1,347,350,000
• Population density:363.3People per square kilometer
• Capital: Beijing(population21,700,000)
• Currency: RMB/element(CNY)
• Main imports: petroleum, copper, iron, machinery, plastics, medical equipment, organic chemical raw materials
• Main exports: rice, accessories, clothing, office supplies, electronic products, machinery, steel, Yao Ming, Jackie Chan, Apple tablets, Chery cars
• Import partner: Japan12.7%Korea9.9%, USA7.3%Germany5.3%Australia4.37%
• Export partner: United States18.0%Japan7.7%Korea4.4%Germany4.3%The Netherlands3.2%
• Time zone: East Eighth District, East Seventh District, East Sixth District, East Fifth District, and East Fourth District
• Website:http://www.gov.cn/

Economic Overview

2009At the end of the year, China surpassed Japan to become the world's second largest economy. reach2011Year, ChinaGDPReached7Trillion US dollars.

It has not always been so strong. For a long time, China maintained a planned economy that was detached from other countries in the world. After the establishment of the People's Republic of China, China began to open its doors to the world.

The Chinese economy20From the end of the century to21At the beginning of the century, it achieved significant development because it maintained a double-digit growth rate. Its prosperous economy has driven the development of emerging markets.

Interestingly, its economic growth is driven by agriculture and industry, which account forGDPTotal60%。

Export trade plays a very important role, and high-quality and affordable goods make Chinese goods more attractive in the international market.

In the past year, there have been concerns in the market about China's overheating economy. To this end, the Chinese government has implemented a series of monetary and fiscal policies to relax transactions and maintain growth levels.

Monetary and fiscal policies

The People's Bank of China is located in Beijing and is responsible for China's monetary policy. In addition to controlling interest rates and deposit reserve ratio, the People's Bank of China is also responsible for supervising financial institutions in Chinese Mainland. One thing to remember: did you know that the People's Bank of China holds the largest amount of financial assets among all existing public financial institutions? It currently holds value3The US treasury bond of trillion dollars, not to mention the amount of bonds of other countries on its balance sheet.

This is not too surprising, just think about the economic performance gap between other countries and China.

The first interesting thing about the People's Bank of China is that a few years ago, its interest rates could be9Dividing, not being divisible25Divided by an integer. This is because China has established its interest rate system based on an abacus, which is set up in multiples of nine. You can imagine that the benchmark interest rate0.18%Is the reading correct?

However, in the2011In, the People's Bank of China abandoned its original approach and adopted traditional methods0.25%The interest rate increase and reduction system.

In addition to interest rates, the People's Bank of China can also adjust the bank's reserve requirement ratio(RRR). The reserve requirement ratio refers to the amount of cash that Chinese banks can retain. By adjusting the reserve requirement ratio, the People's Bank of China can control the amount of cash in circulation and maintain inflation at the target level.

Understanding RMB

The yuan is the basic unit of modern Chinese currency or renminbi. If you always confuse the yuan with the Chinese yuan, all you need to remember is that the yuan is the official name of the Chinese currency, and the yuan is the actual unit. Although China is reforming its exchange rate policy, the yuan is priced in the US dollar. This means that if the US dollar appreciates or depreciates, the yuan will change accordingly. Therefore, the RMB is notforeign exchangeCommon trading currencies in the market.

This dependency relationship has led to tension in the relationship between China and the United States. The United States has always regarded China as a currency manipulator. Due to the undervaluation of the renminbi, haters claim that it gives China an unfair trade advantage, which is also the main reason for China's economic growth.

From China's perspective, in recent years it has relaxed restrictions on the renminbi. They began launching bonds priced in Chinese yuan in Hong Kong. It is reported that financial giants are eager to convert their cash into RMB and then invest in assets priced in RMB.

Important economic indicators related to the RMB

GDPThis data, as a transcript of China's economy, reflects the expansion and contraction of the Chinese economy(Recently, its status is the former, close to double digits)The degree of. This report is released quarterly and shows the level of year-on-year changes.

CPIThe People's Bank of China closely follows ChinaCPIThe report reflects the changes in price levels over a specific period of time. IfCPIIf the reading exceeds or falls below the predetermined target of the Chinese government, the People's Bank of China will change its monetary policy at its next interest rate meeting.

Trade balance: A large part of China's economy is composed of national trade, which means that the trade balance is one of the important indicators of economic growth.

The People's Bank of China's interest rate decision: The People's Bank of China will decide whether to take interest rate action based on overall economic considerations, but the People's Bank of China does not regularly announce interest rate results.

Trading China Economic Report

Even if the renminbi is not a common trading currency, it does not mean that you cannot profit from it.

Because China has a huge economy, its economic performance will affect countries closely related to it. One of them is Australia. China is Australia's largest trading partner, and the two countries trade hundreds of billions of dollars in products annually.

Therefore, China's economic data has the greatest impact on the Australian dollar among the major currency pairs. The strong economic data from China indicates that China's demand for Australian goods may increase, while a decline in China's economic data means that its trade with Australia will shrink.

Of course, as China is the second largest economy after the United States, its economic situation has a significant impact on risk sentiment. This means that a slowdown in the Chinese economy will reduce investors' preference for risk and high-yield currencies, as they are concerned that this will hinder the development of the world economy. On the other hand, China's economic prosperity is a positive signal, as market participants' risk appetite increases due to the economic boom.

Trading Skills

If you are following the Australian dollar trading, you must mark the release time of China's economic data and the People's Bank of China statement on your calendar.

Usually, unexpected Chinese economic data will drive up the Australian dollar/USD or AUD/The yen, while lower than expected data will trigger short selling in the Australian dollar. The interest rate decisions of the People's Bank of China are somewhat complex as they are influenced by market sentiment.