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China must resist cheap money temptation

First published:, 1/10/2014

Lower borrowing costs are the last thing needed to rebalance economy

The democracy protests in Hong Kong are unlikely to unhinge global markets so long as there is a peaceful outcome. They do, nevertheless, constitute the first serious threat to President Xi Jinping and China’s strategy to manage the economy at a difficult time.

For more than two years, China’s official lending and deposit rates have been fixed at 6 per cent and 3 per cent respectively. Monetary and credit conditions have tightened a little, though, because nominal gross domestic product growth has fallen, from nearly 12 per cent to about 9 per cent….“more:”