China’s Slowing Economy 'May Tip Global Economy Into Recession'

Finance and Trade
26/10/2015 09:59

Although China has cut interest rates and reduced the level of reserves banks are required to hold to combat the country's slowing economy, it is not clear that the actions will be sufficient to boost growth, writes the New York Times. It is the sixth time the bank has cut rates since November. The government announced last week that the economy grew at 6.9 percent in the third quarter, its slowest quarterly pace since 2009, but some independent analysts believe the actual growth rate is probably lower than the government’s estimate.
Cutting interest rates and bank reserve holding levels might not do much to stimulate the economy anyway since many Chinese industries are closing factories and firing workers and won't be borrowing money even if interest rates fall and banks are more eager to lend to them.

"Because it is the world’s second-biggest economy, China’s monetary and fiscal policies increasingly matter to the rest of the world. If the country’s growth slows sharply in the coming months, that could help to tip the already fragile global economy into another recession."