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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Elroy Jetson who wrote (8607)7/2/2004 8:20:43 AM
From: mishedlo  Read Replies (1) of 116555
 
China needs to relax money tightening to avoid hard landing - report
Friday, July 2, 2004 1:13:52 AM

SHANGHAI (AFX-ASIA) - China's central government needs to relax measures to cool the overheating economy if a hard landing is to be avoided, the Financial Times quoted a senior government researcher as saying. Xia Bin, head of the Development Research Center under the State Council, China's cabinet, was quoted as saying that administrative action was necessary to stop overheating in some sectors, but warned that the central bank's 17 pct loan growth target was too small for China's investment-hungry economy. "I think that this kind of tight money supply is somewhat too fierce to maintain, so I am stressing that we must not have a hard landing," he said

Economic data have shown a marked slowdown since the end of April when the government implemented stricter measures to control the economy. Fixed asset investment growth fell to 18.3 pct in May from 34.7 pct in April and 43.5 pct in March. Xia warned that government-imposed controls on lending have threatened viable investment projects which ran the risk of collapse, creating more bad loans for the already indebted banking sector

"There may be a rapid rise in non-performing loans," Xia said. "Some projects have been too tightly restricted and the loans on these projects may not be repaid

"I have heard that many private enterprises complain that they can't get loans, and that not only do the banks not lend, but they call in loans they have already made."
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