Small businesses, big challenges: The reality of China’s post-US Fed cut economy
Additionally, analysts told CNA that the effect on small businesses would probably be generally direct and minimum. According to Mr. Bell,” I do n’t think Fed cuts will have much impact on Chinese consumers,” adding that” small businesses with a domestic focus are less impacted,” while citing low domestic confidence as a limiting factor.  ,
” Frequently, small businesses and individuals are shielded from immediate effect by broader plan adjustments”, said American economic columnist Mr Daryl Guppy, even the CEO and founder of Guppytraders.com.
He noted that US economic policy may have a far greater impact on Chinese usage habits than US tariffs and punishment.  ,
The main effect may be price changes for imported American items.
Next THE FED?
China’s central bank has implemented a number of smaller cuts, including a policy interest rate reduction of 0.2 % and a reduction of banks ‘ reserve requirements by half a percentage point, despite the Fed’s aggressive stance in cutting rates.  ,
However, Mr. Guppy made it clear that the PBOC’s actions did not directly affect the US’s subsequent actions.  ,
According to Mr. Guppy,” PBOC policy decisions are not made in a knee-jerk effect to US policy.” Lower rates often lead to a higher consumer and business confidence because they lower the cost of loans and paying off debt.
Experts believe Beijing’s factual response to the US Fed price cuts could also provide some much-needed information into its possible future actions.
According to Mr Bell, China generally “has had a very distinct economic policy platform than the Fed’s interest-rate focused strategy”.
” For much of the early 2000s, China pursued a dollar nail, and after that, a much more quantity-driven model focused on the quantity of credit rather than their cost”, Mr Bell told CNA.  ,
He also explained that China was “more insulated”, because of its relatively” closed” investment account, at least until 2015, which helped it experience fewer spillovers from international financial situations. Companies and individuals are prohibited from moving money into and out of the country under strict regulations in a sealed capital account.
China focused on a lot of fiscal and credit stimulus when extreme crises struck and threatened to spread through the trade channel.
Some believe that Chinese politicians should concentrate on resolving these internal problems, such as revitalizing the faltering business, which may call for a more subtle approach this time around.
” China’s emotions are tempered by the demands of the local economy and policy information”, he said. ” US Fed rates movements are a factor that may make it easier, or more difficult, ( for China ) to continue with an appropriate domestic policy”, said Mr Guppy.
Although Mr. Bell believes that China” should not be in a location where Fed moves matter little,” he also acknowledges that “any global circumstances,” including Fed rate policy, had have” a more important impact on the Foreign economy.”
” But that is not a given, many more a representation of lacking plan activities in Beijing”, Mr Bell added.  ,
