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Analysts worried despite stable yuan

According to The Wall Street Journal, the calm in China’s currency is making some investors uneasy. Twice in the past year, sudden drops in the value of the yuan have rattled global markets. Since then, the People’s Bank of China has calmed the waters by improving communications and the government has increased stimulus in a bid to stabilize growth. However, analysts are worrying that stimulus alone won’t be enough to get China’s growth back on track and support the yuan indefinitely. Since its devaluation in August 2015, the yuan has depreciated 6.9% against the dollar. But recent stability came at the cost of delaying reforms. To sustain growth, China has postponed overhauls of its state-owned enterprises, many of which are plagued by overcapacity and bad debt.

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