Last month China recorded its largest-ever
surge in bank loans, the government reported over the weekend.
While
the rest of the world begs for lines of credit and U.S. policymakers struggle to unclog the financial system, Beijing has announced
that it will need to "strictly
control lending," especially to certain areas of the economy such as "high-polluting,
high-energy consuming industries and...those with overcapacity."
Part of the Chinese government's concern is that money from
their stimulus package, announced last
November, is getting stuffed into various industries that may eventually
produce a spate of overly risky loans. They also worry about the onset of
inflation in 2010, if too much money gets dumped into the economy now. Remember
the good old days (as far back as summer 2008) when Beijing's biggest economic
worries were high
inflation and over-heating?
Well, even if we don't, the Chinese certainly do. And they plan to avoid
revisiting them.
In a related announcement on Saturday, Chinese Prime Minister
Wen Jiabao explained that the Chinese economy was performing better
than expected, building on recent positive projections from a variety of
analysts, including some at the World
Bank. A day earlier, U.S. President Barack Obama gave a press conference at
which he expressed "glimmers
of hope" for the American economy, but comparatively, the evidence for his
prognosis seemed much more meager.
And it's safe to say that the Chinese noticed that fact as
well. In fact, while reading this China Daily (one of China's state-run
newspapers) report, it's hard not to detect a sense of schadenfreude coming out of
Beijing when it compares Chinese prospects:
'Despite the year-on-year slowdown, the Chinese economy
has posted a strong recovery on a quarterly basis, making us more upbeat about
the country's economic prospects,' said Frank Gong, senior economist, JP
Morgan, who predicted China's quarter-on-quarter GDP growth has rebounded to
about 5 percent in the first quarter from only 1.5 percent three months
earlier."
to American prospects:
US President Barack Obama said last Friday that the US
economy was beginning to show 'glimmers of hope,' as mortgage
interest rates declined to historic lows, while refinancing has shown
significant pick-up. But some analysts said the largest economy in the world
and also China's major trade partner is far from bottoming out, given the
severe stress of financial malaise and job losses."
One hopes that China will
use this growth potential not just to expand its regional
influence and national
interests, but also to continue to take positive steps in global cooperation. After all, they certainly still
have great
interest in the health of the American economy.
Photo: Frederic J. Brown/Getty Images
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