By KEITH BRADSHER Jan. 7 (International Herald Tribune) -- HONG KONG — China’scentral bank raised a key interest rate slightly on Thursday forthe first time in nearly five months, a move that economistsinterpreted as the beginning of a broader move to tightenmonetary policy and forestall inflation.
After breaking stride a year ago during the global economicslowdown, the Chinese economy resumed galloping growth lastsummer. Government investments, real estate construction andconsumer spending are all rising briskly thanks to a surge inlending by government-controlled banks.
Even exports have begun to recover despite continuedeconomic weakness in the European Union and the United States,China’s two biggest overseas markets.
Raising interest rates may help discourage speculativeinvestments by Chinese companies and individuals in real estateand other realms. China’s dilemma is that higher rates may alsoprompt overseas investors to redouble their efforts to push moneyinto China despite the country’s stringent capital controls.
The People’s Bank of China announced Thursday that the yieldfrom its weekly sale of three-month central bank bills had inchedup to 1.3684 percent. The yield had been stuck at 1.362 percentsince August.
An increase of less than 0.05 of a percentage point mightsound small, but economists said it was a harbinger of furtherinterest rate increases to come. They cited expectations thatconsumer and producer prices will rise in the months ahead,particularly compared to low price levels a year ago, when demandslumped in China as well as the rest of the world.
“It is a turning point,” said Ben Simpfendorfer, aneconomist in the Hong Kong offices of the Royal Bank of Scotland.“There is a convergence of events that will lead to higherrates.” Central banks around the world have a history of takingsmall steps at first when they begin raising interest rates aftera long period of keeping rates low in response to an economicdownturn. Because China does not have a well-developed bondtrading market, the yields on weekly sales of central bank billsare widely watched as a barometer of the central bank’sintentions.
The central bank bills are mainly sold to banks, which payrenminbi that the central bank then effectively takes out ofcirculation.
Weekly sales of central bank bills are part of whateconomists describe as “sterilization” of China’s massivecurrency market intervention: The central bank prints vast sums of renminbi, issues them in exchange for dollars that go into theforeign exchange reserves, then claws back the renminbi from themarket through a series of measures that include the sale of central bank bills.
The goal of sterilization is to keep inflation under control in China while keeping the renminbi weak relative to other currencies. This helps keep exports competitive overseas andpreserve employment in China.
China’s foreign-exchange regulators have redoubled theirefforts in the past two months to prevent inflows of so-calledhot money — capital that moves on a short notice to any countryproviding better returns. Such funds often enter China inviolation at least of the spirit of the country’s foreignexchange controls, although not necessarily the letter of theregulations. With the exception of investments that bring the transfer ofscarce technologies or management expertise, China has adwindling need for foreign capital. A domestic savings rate ofclose to 40 percent has made ample money available for newprojects. The central bank is already buying over $300 billion a yearworth of foreign currencies, mainly U.S. dollars, to keep China’sown currency, the renminbi, weak against the dollar and preservethe formidable competitiveness of Chinese exports in foreignmarkets. So the central bank has had little appetite to buy evenmore foreign currency so as to allow foreigners to invest inChina’s growth while preventing the renminbi from appreciating.
Click here to see the story as it appeared on the New York Timesweb site.
Copyright 2010 The New York Times Company
-0- Jan/07/2010 11:00 GMT
沒有留言:
張貼留言