China's Economy Awaits Stimulus Amidst Leadership Transition

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With the economic situation in China continuing to worsen and more figures highlighting the downward pressure, the wait is now not for more data, but more action.

Premier Wen Jiabao had spoken of economic stimulus initiatives during his trip to Guangdong province last week, when he said, “we should take targeted steps to stabilize growth."

Most recent figures had raised expectation that regulators would cut the reserve ratio requirements for banks—the last one was in May. There have also been unconfirmed reports of a rebate on export taxes to help manufacturers hit by a slowdown in global demand.

However, little to no action has been taken outside of talks about actions.

With the upcoming 18th Party Congress in October, Chinese leaders have been preoccupied with negotiating a delicate power transition, and any major initiatives to fix the economy may have to take a back seat.

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