Content about Macroeconomics

Financial crises in the United States and Europe mean the world needs a new, more stable global reserve currency, and rapidly rising trade in renminbi. In the foreign exchange market, for example, RBS Group figures show that the volume of renminbi trade is now about $5-6 billion a day, double of what it was a year ago.

A number of factors suggest that China wants to internationalize its currency by 2015.

As China enters a new phase of economic development, doubts are being raised over its ability to maintain a reasonable enough growth to join the ranks of advanced economies. To do so, it is often said, China should replace investment with consumption and learn lessons from other countries how to avoid the so-called “middle-income trap”.

Guangdong province has been the first to respond to the central government’s directive requiring details of how local governments will implement measures to strengthen controls on the property market.

Its stance is rather mild, however, largely echoing the wording of the policy guidelines issued by the State Council on March 1.

HSBC Holdings PLC expects China to push harder this year for the yuan's convertibility and trading freedom as part of the nation's goal to make the yuan a global reserve currency.

Qu Hongbin, HSBC's chief China economist, said at a news conference on Monday that the time is right for China to speed up liberalization of its currency, and this is consistent with his earlier prediction that the yuan will be fully convertible in trade and investment by 2015.

Since 2008 and the great financial crash in the West, China, a fast-growing emerging country with the world’s largest pool of savings, has been pushed into a central place as a result of the economic weakness of most of the developed or G7 countries.

The fact that in 2012 China overtook the US to become the world’s largest trader of goods underlines that, no matter how much China’s domestic demand expands, China’s economic fortunes remain closely linked to the other major global economies.

China won't engage in any "currency wars" by depreciating the value of the yuan through monetary easing policies to shore up the economy, as some major economies have done, said a former deputy central bank governor on Tuesday.

"The yuan will continue to fluctuate in both directions as the central bank strengthens market-oriented reforms," said Wu Xiaoling, who is still closely connected to the People's Bank of China and is now the vice-chairman of the National People's Congress Financial and Economic Affairs Committee.

The possibility of further interest rate hikes cannot be ruled out this year, if the government is to meet its inflation and money supply targets, an academic adviser to the central bank said on Wednesday.

Qian Yingyi, a professor at Tsinghua University who advises the People's Bank of China, said the economic growth conditions this year will be better than 2012, but that inflation could become an issue due to easing monetary policies worldwide.

A growth target of 7.5 percent and a greater focus on consumption and economic reforms were some of the goals set out by Premier Wen Jiabao in a keynote address on Tuesday.

An inflation target of 3.5 percent was set, below the 4 percent target of 2012, Wen said in his last Government Work Report to the National People's Congress.

The growth target is the same as last year's, when GDP increased by 7.8 percent from a year earlier, a 13-year low.

Economic growth in 2011 was 9.3 percent and 10.4 percent in 2010.

China's foreign exchange regulator has warned of the potential risks of increased capital inflows in 2013, despite annual calculations showing that the flow of "hot money" turned negative last year.

There have been ongoing fears that China may face a rebound in capital inflows this year, partly due to the ongoing loosening in monetary policies by developed countries as well as growing interest in the Chinese economy from foreign investors.

The record-breaking takeover of Canadian oil and gas company by a Chinese oil firm is in line with the recent trend of explosive growth in China's overseas investment.

China's overseas investment activities have injected fresh blood into the otherwise bleak global investment markets in the post-crisis era and helped accelerate the recovery of the world economy.

The $15.1 billion deal between Nexen and the China National Offshore Oil Corporation marks the largest-ever overseas acquisition by a Chinese company.

China's manufacturing production growth hit a four-month low in February, dented by the Chinese New Year holiday and continued weakness in external demand, banking giant HSBC Holdings Plc said on Monday.

A prediction saw the manufacturing Purchasing Managers' Index retreat to 50.4 in February from 52.3 in January, but still showing the sector was expanding, HSBC said.

A reading above 50 indicates expansion and it was the fourth consecutive month of growth, after 12 months of contraction.