Chinese Real Economy Stays Feeble, The Easing Monetary Policy Continued

The production of real economy continued weakness in China, Data shows the production was not significant stabilizing under the steady growth policies. The coal consumption of top six power generation group continue to decline significantly compared to same period of last year, weekly decline expanded to more than 10%, capacity utilization lower than the level of stableness of companies. However, thanks to the easing monetary policy, sales of 30 large and medium-sized cities’ real estate increased 10% year-on-year, the most obvious increase were the first-tier cities, along with the real estate friendly policies continue to launch, the real estate will rebound. In general, the real economy is still relatively weak, the stableness of supply and demand are not solid, to keep economic recovery still needs related easing policies.
 
Continue to outright easing monetary policy. The third quarter monetary policy report of central bank shows overall easing monetary policy will continue, policies tend to take further ease lending to the real economy, and guide the real economy interest rates to continue downward. At the same time the central bank had analysis of deflationary pressure expansionary policies, such as necessary act by cutting rates to avoid price downward could increase liabilities pressure, which forming a vicious cycle of economic downturn. The fact that the central bank discusses debt deflation itself represents the easing monetary policy, which will continue to guide real interest rates fall, the central bank has a large probability to further rate cut in the future.