Sunday, February 21, 2010
China Tightens Bank Lending Rules
Banking regulators in China are tightening their rules about lending money. The reason for this being that they don't want to get themselves in any financial problems because of excessive lending. Their central bank has avoided raising interest rates which will slow down growth, so they must control their lending.
Subscribe to:
Post Comments (Atom)
This is probably smart for the Chinese, since they have bought up a lot of the US debt, they don't want to over loan and then find out all of their money is elsewhere. I wonder how the Americans or other foreign economies will respond to these new policies.
ReplyDeleteThis is good for the Chinese and I think its great that they are looking long term. The Chinese are also lowering the money supply by increasing the federal reserve requirement, at the same time they are being quite strict about giving out loans.
ReplyDeleteIn keeping track of Chinese economy over the last month what we can clearly see is China's fear of an inflation in the near future. But what I am afraid of is this might affect Chinese's investment on new industries such as renewable field. China has the biggest renewable energy infra structure and if the tightening continues it may deprive itself of gaining extra GDP from this field. Investors should be encouraged to invest on the other hand they must be warned about the upcoming inflation.
ReplyDeleteIn 90s the Chinese economy suffered the problem of overheating. Former premier Zhu Rongji received much praise for solving this problem effectively. Now it seems that faced with the similar problem, the Chinese government find a good way the deal with it.
ReplyDelete