Friday, January 8, 2010

To Slow Growth, China Raises an Interest Rate

Workers demolishing a house to make way for a residential area in Changzhi, Shanxi Province, last month. Real estate construction is rising briskly, thanks to a surge in lending by government-controlled banks.









China’s central bank raised a key interest rate slightly Thursday for the first time in nearly five months, in what economists interpreted as the beginning of a broader move to tighten monetary policy and forestall inflation.

After breaking stride a year ago during the global economic slowdown, the Chinese economy resumed galloping growth over the summer. Government investments, real estate construction and consumer spending are all rising briskly, thanks to a surge in lending by government-controlled banks.

Even exports have begun to recover despite continued economic weakness in the European Union and the United States, China’s two biggest overseas markets.


How? Other Asian markets?

More Photos

Victor Fung, the nonexecutive chairman of Li & Fung, a Hong Kong-based trading and supply chain management company that is one of the world’s largest, said that overseas demand had not been strong enough to sustain the strength in China's shipments seen last month. But he added that his own staff was somewhat more optimistic than he is, as are some investment bank economists.






A Booming Economy in ChinaSlide Show
A Booming Economy in China

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