Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (1970)	12/14/2003 10:43:01 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Has Irrational Exuberance Hit China? By KEITH BRADSHER Published: December 14, 2003 ong Kong POWER plants in China cannot keep up with electricity demand, and so many steel mills are being built there that all the world's iron ore mines together may not be able to supply them adequately. Inflation, in the 12 months through November, ran at the fastest pace in six years, and the country's money supply is rising 20 percent a year. So what did China's leaders do last week? Prime Minister Wen Jiabao said in Washington that China was not yet ready to let its currency, the yuan, rise against the dollar in foreign exchange. Economists say that this means speculative and foreign investments are likely to continue to pour into China. In Beijing, the People's Bank of China reduced the interest rate it pays on bank reserves in excess of the legal minimums. That easing of monetary policy, partly reversing a tightening that took effect on Sept. 21, will give banks an incentive to lend even more money to companies and individuals. While China's leaders portray themselves as farsighted engineers who can manage their country's economic growth better than a democratically elected government could, their recent economic policies show a strong inclination to let the good times roll for now and to worry later about any ensuing bust. Prodding the money supply while resisting currency appreciation shows a reluctance to let economic growth falter at all, even as Western economists put China's expansion at an annual pace of 10 percent this fall. "If you're very preoccupied about social stability and you've got a weak banking system, do you really want to appreciate your currency?" said William Belchere, chief Asia economist at J. P. Morgan Chase. Alan Greenspan, the Federal Reserve chairman, was accused in the late 1990's of letting the money supply grow too fast to accommodate American economic growth. Economists differ on how much this expansionary monetary policy aided the Internet boom and subsequent bust. But Mr. Greenspan's management of the American economy then seems downright stodgy compared with the conduct of China's rulers now. Indeed, Mr. Greenspan warned in a speech on Thursday of a possible overheating of China's economy, "with its potential recessionary consequences." nytimes.com