| Roubini calls on China to tighten monetary policy |
Beijing needs to tighten its monetary policy to head off asset bubbles, leading economist Nouriel Roubini said on Thursday.
"It will be nice to see an increase in the interest rate ... in China because credit growth in China has been excessive," Roubini, told reporters on the sidelines of the Asian Financial Forum. "Doing it sooner rather than later probably is the right policy."
China easily beat its 2009 growth target after a blistering fourth quarter performance that put it on course to overtake Japan as the world's second-largest economy.
China's gross domestic product expanded 10.7 percent between October and December, fueled by a 4 trillion yuan ($505 billion) fiscal stimulus package.
Worried that the strong economic data will mean further tightening, investors sent Hong Kong stocks down 1.99 percent on Thursday to its lowest level in more than three months.
Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said tighter monetary policy in the mainland was necessary.
"There are already signs of overheating of some parts of the economy and that is why China has surprised the market and started tightening its monetary and credit policies," he said in a speech earlier in the day.
"The policy action may lead to short-term negative impact on the market but that is necessary."
Even though China is in better economic shape than the developed economies, asset bubbles in commodity, real estate and equity could eventually slow the country's economic growth, Roubini said.
Last week, Roubini said the economic slump in the United States would persist and that consumption will remain weak while the U.S. economy will probably slow in the second half of 2010.
Financial Mirror, January 21, 2010 - Reuters |
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21-01-2010 |
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