Sunday 17 January 2010


DARK ECONOMIC CLOUDS ON THE HORIZON FOR CHINA
While it may look to the world as if the growth of the eastern giant's economy is unstoppable, there are mounting concerns, says Heather Stewart

Heather Stewart

The Observer, January 17, 2010

Barely a week goes by without yet another stunning fact from the Chinese economy. Last Friday brought news that despite spending billions on the world's largest fiscal stimulus package to help escape the global downturn, China's vast foreign exchange reserves shot up by another 23% in 2009, to a stunning $2.4tn (£1.4tn) – almost twice the GDP of the UK. Official figures this week are expected to show that while the rest of the world was struggling to emerge from recession, Chinese growth was running at a rampant annual rate of more than 10% in the final three months of the year.

With China barely breaking stride during the Great Crash, and set to surpass sickly Japan as the world's second-largest economy by the end of 2010, it would be easy to see the turmoil of the past two years as setting the seal on the inexorable rise to dominance of the eastern giant.

However, dark clouds are gathering on the horizon. First, there are mounting fears over China's dramatic bounce-back – bubbles are inflating in the stock market and housing that could burst, with catastrophic results.

Capital controls protecting the currency from a financial exodus mean it's hard for domestic investors to send their surplus funds abroad – so with banks directed to pump up lending, cheap cash is pushing up asset prices at home. Bank lending in December was more than 95% higher than a year earlier, according to the People's Bank of China.

(...) [artículo aquí]

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