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Rapid Credit Growth in China
With the implementation of a $585 billion stimulus program, Chinese policymakers have managed to compensate for a huge drop in exports, which to this point have been the lifeblood of China’s economy.
But by giving state-run banks the task of financing the massive amounts of infrastructure spending contained in the stimulus package, Beijing has exposed the country’s financial sector in a way that could short-circuit that country’s ongoing economic rebound.
China’s gross domestic product (GDP) expanded 6.1% in the first quarter, the weakest pace in nearly a decade. In an effort to reinvigorate the economy and capture the 8% annual growth Beijing promised…
17Jun2009 | Money Morning | 0 comments | ContinuedChina Has Canceled U.S. Credit Card
AFP:
China, wary of the troubled US economy, has already "canceled America’s credit card" by cutting down purchases of debt, a US congressman said Thursday.
China has the world’s largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.
But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.
Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.
"It would…
4May2009 | The Real Deal | 3 comments | ContinuedTHE POWER OF THE CHINESE CREDIT CARD
If you think that lack of financing is the only thing holding China back from consuming, consuming, consuming like we Westerners do, then prepare for a shock, as from atimes.com we get the report that “China’s Shoppers Stock Up On Cards” by Catherine Jiang.
She writes, “Chinese consumers, until now recognized as among the world’s most determined savers, are adding credit cards to their wallets in record numbers, with the number of such cards in circulation almost doubled in the first quarter from a year earlier.”
I am looking at my calculator and wondering if I want to spend the rest of…
22Jul2008 | Daily Reckoning | Comments Off | Continued
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