Beware o miniature circuit breaker f excess liquidity
miniature circuit breaker couture wedding dresses escarpin pas cher diamond polishing pads scratch card FRP cable tray skateboard bearings red bull caps unlocked phone billige kleider thyristor radiator suppliers bottes blanches Foam machine Piston pump equipaciones de fútbol pneumatic components wooden toys knitted fabric cabinet handle
Beware of excess liquidityPublished: 25 Aug 2009 08:02:01 PST
By Cong Mu
Norbert Walter, chief economist of the Deutsche Bank Group, believes that China should use its monetary policy tools and appreciate the yuan to rein in the country's rapid credit expansion and cool down an economy in danger of overheating.
Norbert Walter Photo: Stefan Freund
Walter is alarmed, among other issues, about China's $1.1 trillion lending spree for the first half of 2009.
“My goodness!” he said. “Look at the expansion of nominal credit, it's certainly something that probably leads to overheating.”
As Asia Money magazine pointed out recently, fears abound that some of the new loans, which account for 25 percent of China's GDP, ended up funding property and equity market investments, while the sheer volume of lending has meant that the banks couldn't conduct thorough credit checks.
Meanwhile, Chinese banking regulators are considering raising the core capital requirement and capping the issuance of subordinated and hybrid debts, which the banks have used to boost their capital adequacy ratios, according to reports.
Walter, who was in Beijing as part of his final world tour prior to stepping down from his current position, discussed those and other issues Monday with the Global Times (GT).
GT: The commercial banks issued subordinated debt worth nearly $63 billion in the first seven months, and some of this debt was their mutual holdings. Do you see any systemic risk in the banking system now, or in the foreseeable future?
Walter: My worry is not so much about the systemic risk in the banking sector, because the Chinese banks at this moment have capitalization everybody else would really love to have. The capitalization in the case of Chinese banks has moved up, whereas the capitalization of almost all other banks around the globe has precipitously fallen. So the capitalization is fine. The solvency issue is not an issue.
The issue here is a macro economic issue. It is the very fact that in a situation where obviously some international demand is not fully developed and the credit expansion might lead to overheating the domestic economy. And, of course, this would be something the authorities at the end of the day would have to control. So in order not to let a bubble develop first, there should be a warning by the authorities themselves and by international analysts as well.
Therefore, my reading is your authorities will start with a combination of minimum reserve requirements and interest rates, and, by doing so probably get a deceleration of the growth rates.
GT: Yin Weimin, Minister of Human Resources and Social Security, said Friday that China is still facing a severe unemployment situation. But you expect the US dollar to continue to be weak until 2011 or 2012 and that the yuan will resume appreciation next year. Why?
Walter: I believe that there is some need to cool down the economy and … the two instruments I've already mentioned were monetary policy instruments ... And the third, of course – working exactly in the same direction – is an appreciation of one's currency exchange rate.
I guess that with the Americans still in limbo and still not having seen their economy even starting to grow, they probably would ask for some international cooperation to help them to improve their exports … A weakening of the US dollar is something that is very much in line with what Americans need to get their recovery going.
So I guess a combination of domestic considerations plus international considerations will lead to some allowing for a modest appreciation of the yuan.
But you're right, there is dilemma that probably not enough jobs will be created. And I s老房子 弹簧 除湿机 门禁 カード 現金化 比較 北京翻译公司 超声波清洗机
