Changing China
Giant on the move
China’s pursuit of stability risks greater stress
By Ethan Devine
The author is a guest Breaking Views columnist; the opinions expressed are his own.
While Western economies wither, China is in an entirely different predicament. Beset by high inflation and a frothy real estate market, Chinese policymakers have been trying to cool their economy for going on two years. The central bank, the People’s Bank of China, has led the charge, restricting loans to real estate and hiking the required reserve ratio 12 times in 21 months.
Thanks to this, along with slower growth in the United States and Europe, Chinese inflation is now waning. Add an incipient export slowdown, and China may soon be able to loosen credit to everything but real estate. Neither too hot nor too cold, this Goldilocks economy superficially looks just right for China.
Unfortunately, the reality is that China’s economy more closely resembles a boiling bowl of porridge with a clump of ice in the middle. Poorer provinces are on a debt-fueled construction binge in open defiance of Beijing, so policymakers have to over-tighten where they do have control.
from George Chen:
China is still waiting for inflation to peak
By George Chen
The opinions expressed are the author’s own.
How time flies. It's already the end of August and speculations naturally arise about what China's inflation reading will be for this month.
The most optimistic view these days is that the August Consumer Price Index (CPI) could decline to below 6 percent. The most pessimistic view I've heard is that growth has slowed down in August, but probably only to 6.2 percent or 6.3 percent.
