The two largest economies in the world are sending alarming signals. “China in a deep crisis”

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The American economy is shrinking. The signs of the crisis are also coming from China. A well-known investor has warned that Asia’s largest economy is currently in its worst condition in 30 years. He points out that Shanghai’s financial center has been “semi-paralyzed” by a “draconian” zero-interest policy and a zero-COVID-19 policy.

Concerns about a global recession have not been exaggerated. The US economy sent a very serious warning on Thursday. It turned out that it shrank in the first quarter . Annual GDP fell by 1.4%. against the growth of 1.1 percent expected by economists.

“US economic growth unexpectedly slowed in the first quarter due to rising trade imbalances, soaring inflation and supply chain disruptions, ” reports the Financial Times (FT).

The same British daily writes about serious problems in the world’s second largest economy, China. He cites a famous investor and head of a large Hong Kong fund who speaks of a “deep economic crisis” . Although this is not fully confirmed by statistics yet, because GDP is growing.

The Chinese economy is depressing
Weijian Shan points out that he is to blame for this, inter alia, a government in Beijing that has implemented a zero-tolerance policy for the coronavirus and shut down major cities to slowing economic growth. The crisis compared to a global financial meltdown.

“China’s economy is at its worst in 30 years at the moment, ” said Weijian Shan, quoted by FT.

“Market sentiment towards Chinese stocks and public discontent are also the worst in 30 years,” he adds.

He points out that large parts of the Chinese economy, including its financial center in Shanghai, have been “semi-paralyzed” by a “draconian” zero -interest policy .

” China reminds me of the United States and Europe in 2008. While we remain confident in our economic growth and market potential in the long run, we are very cautious about Chinese financial markets,” admitted Shan.

Chinese central bank promises support
The People’s Bank of China is aware of the seriousness of the situation. In recent days, he has declared to increase support for the economy . This is a response to the next wave of the coronavirus pandemic , weaker growth prospects, and unrest in the markets over the COVID-19 zero policy.

The People’s Bank of China ” will step up support for prudent monetary policy for the real economy, especially industry and small businesses that have been hit hard by the pandemic ,” according to a central bank statement quoted by Bloomberg a few days ago.

He also announced that it would maintain fairly high liquidity and support the healthy and stable development of financial markets, ensuring a good monetary and financial environment.

He has pledged to increase funding for small businesses as well as support for large technology companies. Additionally, as Bloomberg writes, it launches special programs for individual branches of the economy.