The Chinese Communist Party’s Stock Market, Currency Market, And Real Estate Market Collapse

On April 25, the Central Bank of Communist China cut the reserve requirement ratio for financial institutions by 0.25 percentage points, releasing long-term funds of about 530 billion RMB into the banking system. Although the central bank announced this news ten days in advance, A shares still fell below the 3,000-point today, and the last time it fell below this threshold was during the financial crisis in 2008.

Not only is the stock market depressing, but the RMB exchange rate is also plummeting. This rapid decline in the exchange rate began in the offshore market. From the closing price of 6.3788 on April 18 to the intraday price of 6.60 on April 25, the value of the exchange rate depreciated by more than 3% in five trading days. On the evening of the 25th, the Central Bank announced that starting from May 15, the foreign exchange deposit reserve ratio of financial institutions will be lowered by one percentage point, from the current 9% to 8%. As a result, financial institutions could reduce 10 billion US dollars reserves. The move by the central bank intends to increase foreign exchange liquidity and stabilize the RMB exchange rate.

In addition, real estate, a leveraging investment market, has entered an idling state. In April alone, more than 30 cities in Communist China lifted the policy of restricting purchases and sales. Although more than 80 cities have plans to stimulate real estate transactions this year, the market, filled with unfinished buildings and bad debts, shows no sign of recovery.