Injection of a record amount of money to stimulate the weakening economy seems to be the only way out for the Chinese government. In fact, China's economic growth has been slowing for a couple of years even without the coronavirus outbreak. The country’s authorities were covering up China’s actual performance data. However, the coronavirus epidemic revealed how outdated was not only the economy, but also the political system of the country. All supply chains were disrupted. Chinese manufacturing activity stopped. In order to support the economy, the country’s central bank decided to inject 5 trillion yuan into the market. It is around $725 billion which is also equal to annual GDP of such countries as Switzerland and Saudi Arabia. Experts believe that these measures will not do a lot of good to the Chinese economy. On the contrary, they say that such stimulus can harm both the Chinese financial system and the yuan. The national currency has already significantly weakened against the US dollar. If China does not manage to control the coronavirus situation, the yuan is likely to continue falling. Moreover, actions taken to boost the Chinese economy will not be as efficient as they could have been unless the central bank continues issuing money. According to Hoisington Management, China generated $0.65 of GDP for each dollar of debt in 2007-2009 and only $0.34 over the past two years.
