China Central Bank dismisses pessimism

Paul Farrell of Marketwatch cites the potential problems faced in Asia and the emerging markets and the fight facing China as one of 20 reasons the new megabubble will pop by 2011.

Following the aftermath of the sub-prime losses, world markets are headed into another meltdown.

On the other hand, China’s central bank has rejected assumptions that the economy is faltering due to a fall in exports as a result of the US economic slump.

This stance will mean that policymakers are unlikely to relax lending or reduce the continued appreciation of the yuan in order to aid exports.

The yuan rose by 0.09 percent to 6.9268 versus the US dollar.

The yuan has gained 5 percent against the dollar this year and the central bank has told banks to increase reserves on four separate occasions as the reserve requirement will rise to 18.5 percent in 2008.

The People’s Bank of China is focusing on controlling the sudden hike in prices in the wake of the latest natural disaster to hit the country, rather than dealing with a reduction in exports, even though China’s economic growth slowed to 10.6 percent in the first quarter.

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