The positive news

The positive news is that the services sector managed to recover and has contributed more to the industrial growth in 2014. Retail sales surpassed expectations and rose by 11.9% yoy. Investments in fixed assets (property, infrastructure) grew by 15.7% for the whole 2014, which is close to 15.8% previously forecast. However, foreign investors are more moderate than before, and the capital invested in the industry only increased by 1.7% and for the first time in many capital tends to withdraw from the country. Industrial production in 2014 increased by 8.3%, while in 2013 growth was 9.7%.

Most analysts believe that China's central bank will continue to soften its monetary policy. Bloomberg quoted Wang Tao, an economist at the department of UBS in Hong Kong, as saying more earmark funds for infrastructure, large fiscal deficits and further monetary easing will limit risks to the Chinese economy. Dariuz Kovalchuk from Credit Agricole said to Reuters, that the central bank will cut interest rates again in the first quarter of 2015 to encourage lending. Larry Kiu, a professor at the University of Hong Kong, however, one of the conditions for long-term success for the country is that Chinese companies will be able to generate innovation, instead of relying on imitation of competitive products.

While the whole world economy is grinding to a halt, China and OPEC seem to be the nations with the most ... savings to invest in economic stimulus spending. The USA is spending trillions of borrowed dollars to stimulate its economy. The EU is also spending borrowed money. India seems to be working in the black, but doesn't have the mountains of cash like China and OPEC. The UN is working on developing a coordinated response to the global crisis.

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