Davos-China seen taking more action to slow growth - banker

[HenryTo]

Following article courtesy of Reuters. The IPO of the Chinese financial sector late last year will add to liquidity in the short-term, but it looks like the global authorities still want to clamp down on liquidity. Going forward, the biggest competitor for liquidity will continue to be infrastructure investments - whether it is in China or in the U.S.
--------------------------------------------------------------------------------
By Natsuko Waki

DAVOS, Switzerland, Jan 24 (Reuters) - China's economy has slowed down over the past year but the government is likely to take more measures to tame growth, a Chinese commercial bank executive said on Wednesday.

Zhu Min, group executive vice president of the Bank of China (3988.HK: Quote, Profile , Research), the mainland's second-largest lender, told Reuters on the sidelines of the World Economic Forum that he expected the yuan currency to become more flexible this year.

Asked if China's economy was growing too rapidly, Zhu said: "No," adding: "The current condition is much better than last year. Yes indeed growth was a little bit too high but the government has measures both monetary -- increasing interest rates, reserve requirements... and more importantly fiscal measures - reducing tax rebates."

"The government will take steps to continue to slow the economy down (this year) but things are more balanced now," Zhu said in the ski resort of Davos. China is becoming a driver of world growth, with 2006 real economic growth topping 10 percent, registering double-digit growth for each of the past four years.

Fixed-asset investment, the main driver of recent growth, has been slowing but it still grew about 25 percent in 2006.

China's central bank raised the amount of funds which lenders must hold in reserve by 0.5 percentage point in January, in a move to help curb excess liquidity and a relatively big rise in lending.

It was the fourth such increase since June 2006.

China revalued the yuan in July 2005 but there has been some international pressure on Beijing to let the yuan rise further to help fix global imbalances.

Asked if China should revalue the yuan again, Zhu said: "You will see more flexibility."

[HenryTo]

China is now probably in a financial bubble - but this always can go on longer than anyone thinks. FWIW, the number of brokerage accounts opened in January 2007 in China was greater than during the entire year of 2006. And now we have this:
-------------------------------------------------------------------
GE Asset to offer investment strategy for Chinese market
January 25, 2007

General Electric Asset Management will introduce an investment strategy for institutional investors that focuses on Chinese equities, confirmed Chris Linehan, a spokesman with GE Asset Management. The firm was awarded a $200 million investment quota last week by Chinese regulators, allowing its institutional clients to access China’s A-share market, which until 2003 was reserved for local investors. GEAM officials expect to introduce the new multisector strategy in the next six months. Mr. Linehan said there is “strong interest” from institutional investors, although he declined to identify them

[rffrydr]

Growth powers on--with inflation catching the eye:

http://www.theage.com.au/news/business/unbalanced-but-chinese-economic-monster-powers-ahead/2007/01/25/1169594430866.html

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2d8LBEROGus&refer=home

Bank of India looking to raise rates soon (G7?) with ICICI CEO saying his customers can't take any more. Chinese food the hit of the conference:

http://www.indiaenews.com/europe/20070125/36965.htm
_________________
Today is the Tomorrow you worried about Yesterday!