{"id":363633,"date":"2010-02-25T12:46:00","date_gmt":"2010-02-25T17:46:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/fears-of-a-chinese-bubble-are-overblown-2010-2"},"modified":"2010-02-25T12:46:00","modified_gmt":"2010-02-25T17:46:00","slug":"why-fears-of-a-chinese-bubble-are-totally-ridiculous","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/363633","title":{"rendered":"Why Fears Of A Chinese Bubble Are Totally Ridiculous"},"content":{"rendered":"

\"chinaFrom Project Syndicate<\/a>:<\/p>\n

On the eve of Chinese New Year, the People’s Bank of China (PBC) surprised the market by announcing – for the second consecutive time in a month – an increase in banks’ mandatory-reserve ratio by 50 basis points, bringing it to 16.5%. Shortly before that, China’s government acted to stop over-borrowing by local governments (through local state investment corporations), and to cool feverish regional housing markets by raising the down-payment ratio for second house buyers and the capital-adequacy ratio for developers.<\/p>\n

This latest round of monetary tightening in China reflects the authorities’ growing concern over liquidity. In 2009, M2 money supply (a key indicator used to forecast inflation) increased by 27% year on year, and credit expanded by 34%. In January 2010, despite strict “administrative control” of financial credit lines (the PBC actually imposed credit ceilings on commercial banks), bank lending grew at an annual rate of 29%, on top of already strong expansion in the same period a year earlier. While inflation remains low, at 1.5%, it has been rising in recent months. Housing prices have also soared in most major cities.<\/p>\n

Read the rest at Project Syndicate –><\/a><\/strong><\/p>\n

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