Chinese Premier: “Protectionism Is Clearly Reasserting Itself”
by ilene - March 4th, 2010 10:17 pm
Chinese Premier: "Protectionism Is Clearly Reasserting Itself"
Courtesy of Zero Hedge
At the start of today’s Chinese National People’s Congress, Chinese premier Wen Jiabao poured water over expectations that the renminbi may appreciate any time soon, and also indicated that China will "continue its expansionary fiscal policy" by maintaining appropriately loose monetary policy (translation: it is now next to impossible for the Chinese supertanker to steer off direct collision course with the bubble iceberg). He also noted that "The foundation for global economic recovery remains weak; financial risks have not been completely eliminated" and, most disturbingly, said that "trade protectionism is clearly reasserting itself."
The ramification for US trade policy as a result of this admonition will likely continue to be felt over the next 12 months. Yet in an odd moment of clarity, when discussing the domestic economy, Wen noted "latent risks in the banking and public finance sectors among the key challenges to economic growth, alongside now-standard warnings about industrial overcapacity and shortcomings in income distribution." As for the biggest question of how China will approach the USD-CNY relationship, Wen provided little clarity besides promising to "continue to improve the mechanism for setting the (yuan) exchange rate and keep it basically stable at a reasonable and balance level." As Market News notes, that wording, which is frequently trotted out in government statements, is identical to that contained in last year’s report.
Other disclosures from Wen:
- The government is targetting growth of 8% this year;
- Consumer price inflation will be kept at around 8%;
- The government is targeting new loans of CNY7.5 trillion, down from 2009′s record CNY9.59 trillion: he also pointed out that credit policy will be adjusted to make sure money flows to those who should be receiving it, i.e., farmers and small businesses, and restricted to those that shouldn’t, including energy-intensive industries and those experiencing overcapacity;
- M2 growth in 2010 is targeted at 17%;
Also of note, is a report prepared by the Ministry of Finance which said that the fiscal deficit is planned to be CNY1.05 trillion, or 2.08% of GDP, compared to the 2009 deficit of 2.2% of GDP.
And to the benefit of Chinese skeptics, Wen warned that government will "crack down on excessive property speculation." Just how this will be accomplised in a largely accomodative monetary environment remains to be seen.
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China Trying to Talk Its Way Out of a Bubble
by ilene - August 26th, 2009 4:34 pm
China Trying to Talk Its Way Out of a Bubble
Courtesy of Ben the Financial Ninja
FN: The Chinese government has finally caught on to the fact that they’ve created a bubble and are trying to "talk it down". As long as the central bank and the rest of the banks continue to provide liquidity, Wen Jiabao is going to be as successful as Alan Greenspan was when he warned of "irrational exuberance" while having his foot placed firmly on the monetary accelerator.
China Stocks Decline as Wen Says Economy Faces ‘Uncertainties’: "Chinese stocks, the world’s worst performers this month, extended declines after Premier Wen Jiabao said the economy faces many “uncertainties” and China Construction Bank Corp. warned of asset bubbles."
Asian Stocks Fall on Lower China Earnings, U.S. Credit Concern: "Asian stocks dropped, led by mining and finance companies on lower profit at Chinese companies and amid speculation loan losses in the U.S. will increase."
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.