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China Becomes the First Economy To Withdraw Pandemic Stimulus

China has become the first economy to recover from a pandemic and it is now taking the ways to withdraw the economic stimulus efforts. Other places like the US and Europe are flooding their economy with liquidity and spending.

The China stock market has moved higher in two sessions, climbing almost 100 points or 3 percent along the way. The Shanghai Composite index now sits just above the 3,450-point plateau. Economists are swiftly upgrading their US growth forecasts as Covid vaccinations are distributed and after Washington enacted a $1.9 trillion stimulus package.

Goldman Sachs is calling for 2021 US GDP growth of 6.9%, the fastest since 1984. Morgan Stanley is even more bullish, predicting a 7.3% growth. That would surpass the Chinese government’s humble target of 6%. Washington opted for a far larger stimulus package of $1.9 trillion, featuring $1,400 stimulus checks, enhanced unemployment benefits, larger child tax credits, and $350 billion in aid to states and local governments.

According to the world bank the US economy grew at 4.8% and China expanded at 7.7%. Last time countries’ growth rates were close during the dot-com boom. Brusuelas recently upgraded his US GDP growth forecast to 7.2% for 2021 because of the size of the American Rescue Plan and progress in defeating the pandemic.

China did not announce the special central government bonds this year, after selling approximately $154 billion of such bonds in 2020. The recovery of the US is lagging due to vaccines and the spread of new variant viruses China is a younger economy, with demographic and productivity advantages that will lead to faster growth.

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