Financial Pivot  

Chinese New Year 2018, Year of the Dog, is on Friday 16th February.

The home for trading financial activities and the venues for financial service providers, to take part in their activities is a “ Financial Centre”. The participants in this financial centers are Central Banks, Stock exchange, Financial intermediaries, etc. China's economy occupies a potent position globally in financial marketing, to meet the situation, several financial centres are strengthening their growth in the economy. The Vice president and the Chief Executive for Principal International, spoke recently with CIMB, Principal and gave an analysis stating that until 2003 China is not listed in the top twenties in World's Biggest Companies record, but that scenario was changed within a short period, and in the year 2009, five companies from China were added to the list. Fortunately, among those five companies, three companies are in the top five in the World's Biggest Companies list. This shows how tremendously China's economy is growing. The chief executive also stated that China is currently in the fifth position in the world in financial market. The chief executive with his experience expressed and highlighted that, China is following some growth models, with which it can contribute some percentage of its GDP to the growth. With this the demand for household goods increases, which results in the economic growth. He confidently stated that China will be in the leading position in its financial growth in upcoming years.

Structural Changes in growth model:
To reduce the regional disparities , growth needs to be more balanced in the economic development, where the comparison of the local and global and rising income inequalities may lead a rise in inflation. During the 2009 crisis, China remained strong with GDP growth as it is less dependent on its export markets. This made the remaining global markets to look at the Chine's growth model. The China's growth model report shows that there is a rise in the share of the investment in the government policies and a decline in private consumption. The reason for the fall in the share of GDP is high investment growth and weak employment growth ultimately resulted the labor income, further falls in national income and personal income. Both extreme levels made a fall in the share of GDP. In this situation the China took an active step by increasing the domestic consumption by generating employment opportunities and enhancing welfare, growth for its citizens and sequentially maintaining social stability. The consequences still worsened the China's economy for a short period.
Balancing the Economy by depending on Exports
China's re balancing growth at one level fell over 7% and 3% in the years 2007 and 2010 respectively. To some extent export and import played a recovery role, but only for a short period. When one compares the growth level of import and exports, the investment boom is strong and more for the export but it is lower than that of the import growth, the reason behind is China is weak in advanced country markets, this made the economy to absorb large amounts of China's imports. To adjust the economic imbalances China concentrated the foreign exchange markets to counter the growth imbalances. The statistical data says that in the year 2010, China accumulated nearly $448 billion of foreign exchange reserves. This trend continued in the 2011 first few months and it accumulated another $196 billion of foreign exchange reserves. On an average nearly $200 billion reserve accumulation was made by the economy in the next three quarter's highlights the Chinese Financial Centers and continued in the foreign exchange market.
Financial Development and Reforms
China's twelfth five-year plan gave more priority for the Financial development and reforms. In this contest China's government identified most effective financial system which can play an important role by bringing some of the changes like by increasing the production to reduce the inefficiencies in the market. China's introduced a reformed banking system and lend more small and medium sectors instead of large enterprises where there is less employment opportunities. This banking system worked wonders and there appeared a good development in the nonperforming loans, this significant change increased the assets. Secondly, China liberalized the interest rates as part in banking reforms. Currently the government imposed a ceiling on deposit rates. By analyzing all the areas if all the financial centers are regulatory and supervisory then China can lead a new global financial hub with Chinese characteristics.

 

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