China's Move May Push Capital Controls in Asia . |
| Wall Street Journal - Oct 20, 2010 |
China's surprise interest-rate increase is unlikely to elicit copycat moves elsewhere in Asia, but it could accelerate capital controls in the more export-dependent Asian economies, analysts say.
Tuesday evening's announcement by the People's Bank of China threw global markets into a tizzy and sparked a widespread shift toward safer assets like government bonds by investors concerned that one of the main engines of the global economic recovery was being throttled down.
But the timing—barely 36 hours before China releases third-quarter gross domestic product data--might also indicate growth is so strong that China feels it can raise rates without risking a meaningful slowdown.
"Chinese policy makers are quite risk-averse, and the fact that they're raising interest rates is a signal that they're quite confident that growth is stable in China," said Frederic Neumann, co-head of Asian economic research at HSBC bank. Thursday's GDP release "might actually show that China's economy expanded faster than expected," he said.
Read Full Article from Wall Street Journal
- Posted: 2010-10-20 05:17:29
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