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Benidict Hoffman: China’s Economy Could Benefit from Rate Cut

Benidict Hoffman analysts say rate cut may prompt Chinese consumers to spend more of their
substantial savings.

Taipei, Taiwan, July 15, 2019 --( Trade tensions between the US and China are currently on
pause since the two countries agreed to yet another trade war truce at the G20 Summit in Japan last
month. But analysts at Benidict Hoffman say China's economy is still facing strong risks from worsening
global economic conditions.

Benidict Hoffman analysts say that China may have to resort to a range of measures to help support the
slowing economy. These measures should include reducing interest rates and increasing spending in
welfare, health and pensions. Such measures would prompt Chinese people to save less and spend more,
thereby jumpstarting the consumer driven economy.

China has one of the biggest savings ratios in the world. The global average is around 25% of GDP but
China's is approximately 47%. The Chinese population has long been programmed to save for a rainy day
with the chances of economic risks and poor job security proving a good motivator to save hard earned

These massive savings would be an invaluable resource for China's economy during these hard times but
Benidict Hoffman analysts say it may not be easy to convince consumers to spend more and save less. A
rate cut may go some way to encouraging spending.

The People's Bank of China previously indicated its intention to cut interest rates twice during the course
of this year and again one more time during 2020. Benidict Hoffman analysts say this would be the first
time in four years that the PBoC was reducing interest rates.

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