China bubbles and policy
Fan Gang, China Central Bank Adviser, heads the National Institute of Economic Research, he said at a business conference in Hong Kong : China is among the emerging markets facing risks of property and commodity market bubbles, a “double-digit” economic growth rate would not be good for China.
Few days ago, the local office newspaper reported “Chiense gross domestic product (GDP) may be able to climb 8-9% next year”, that probably a indicator of next financial crisis in Asia in the wake of liguidity injection by the world’s central banks. In the past year, China’s government created $1.3 trillion credit boom, directly helping growth accelerate while at the same time Shanghai Composite Index of stocks climb rapidly, nearly doubled than the lowest point in last year.
Mr. Fan thinks China must continue its stimulus measures to sustain growth in coming year even as he rejected the prospect of double-dip slowdown in the expansion. The US may see a renewed slump.
China should maintain a “moderately loose” monetary policy in 2010 as currently government stimulus effect and private investment are still weak.
