China clamps new curbs on banks
Sunday, 14 February 2010
From Fazle Rashid
NEW YORK, Feb 13: China is the world's fastest growing economy and ups and downs there could affect the global recovery, is an incontrovertible fact that is acknowledged worldwide. Investors reacting nervously to Beijing's move to restraint credit is not something unusual.
China's central bank yesterday clamped a credit restrictions on country's commercial banks asking them to enhance reserves they hold by basic 50 points. Its impact was immediately felt on European and US markets. Analysts in China said increase in reserve requirements is not part of a decision to alarm or slam the brakes on lending.
Easy credit has been the pivotal element in China's rapid economic acceleration over the past one year of worst economic recession. The China's economy defying all logic grew by 10.7 per cent. Chinese banks during this time released a record Rmb9600 billion in new loans.
Financial markets around the world have been rattled by measures taken in recent weeks in China to ease the pace of new lending. This led to fears among investors that tighter monetary policy could slow the global economy sharply. There have been no revision of the new loans targets for this year, a reputed paper said.
If China's move has caused a flutter the world around, the snail pace of recovery in EU is another piece of "bad news." The GDP of the 16-country region grew by merely 0.1 per cent behind 1.4 per cent growth rate recorded by the US. The growth will heighten fear that the recovery has yet to become self-sustaining and growth will remain weak in 2010. Efforts to reduce public sector deficit in Spain, Portugal and Greece will hold back growth this year.
Greece unleashed a fierce attack on its EU partners for creating a "psychology of looming collapse." George Papandreou, Greek prime minister, said his country has been made a laboratory animal in the battle between Europe and the market. Angela Merkel, German chancellor who can best support the collapsing Greece has however been under pressure not to make any public commitment about bailing out Greece.
The general public in Germany supports Angela Merkel for taking a tough line in rejecting any financial bailout for Greek economy. Germany's ruling coalition are also united on this issue. Germany has asked Greece to demonstrate its willingness and ability to take sweeping measures to restore confidence in the financial market.
NEW YORK, Feb 13: China is the world's fastest growing economy and ups and downs there could affect the global recovery, is an incontrovertible fact that is acknowledged worldwide. Investors reacting nervously to Beijing's move to restraint credit is not something unusual.
China's central bank yesterday clamped a credit restrictions on country's commercial banks asking them to enhance reserves they hold by basic 50 points. Its impact was immediately felt on European and US markets. Analysts in China said increase in reserve requirements is not part of a decision to alarm or slam the brakes on lending.
Easy credit has been the pivotal element in China's rapid economic acceleration over the past one year of worst economic recession. The China's economy defying all logic grew by 10.7 per cent. Chinese banks during this time released a record Rmb9600 billion in new loans.
Financial markets around the world have been rattled by measures taken in recent weeks in China to ease the pace of new lending. This led to fears among investors that tighter monetary policy could slow the global economy sharply. There have been no revision of the new loans targets for this year, a reputed paper said.
If China's move has caused a flutter the world around, the snail pace of recovery in EU is another piece of "bad news." The GDP of the 16-country region grew by merely 0.1 per cent behind 1.4 per cent growth rate recorded by the US. The growth will heighten fear that the recovery has yet to become self-sustaining and growth will remain weak in 2010. Efforts to reduce public sector deficit in Spain, Portugal and Greece will hold back growth this year.
Greece unleashed a fierce attack on its EU partners for creating a "psychology of looming collapse." George Papandreou, Greek prime minister, said his country has been made a laboratory animal in the battle between Europe and the market. Angela Merkel, German chancellor who can best support the collapsing Greece has however been under pressure not to make any public commitment about bailing out Greece.
The general public in Germany supports Angela Merkel for taking a tough line in rejecting any financial bailout for Greek economy. Germany's ruling coalition are also united on this issue. Germany has asked Greece to demonstrate its willingness and ability to take sweeping measures to restore confidence in the financial market.