International | Apr 20 2007
By Chris Shaw
It seems not even the implementation of more than a dozen interest rate increases and policy tightening measures over the past 12 months can stop the juggernaut that is the Chinese economy, as for the March quarter it recorded growth of 11.1%, higher than the market had expected and the government had hoped.
This has most commentators and analysts predicting further tightening measures will be introduced, views backed up by comments by government officials and a statement by the National Bureau of Statistics it would continue to implement and strengthen the macro-controls in place.
According to Lehmann Brothers, the issue is more to do with the fact the measures introduced to date are not part of a comprehensive plan, which is reducing their effectiveness in slowing the economy.
It expects further controls will be introduced in coming months, as does Goldman Sachs, which notes the government remains concerned about the ongoing expansion in commercial loans and the signs emerging of upward pressure on inflation.
While the growth figures for the quarter were stronger than expected and should lead to further tightening measures UBS suggests any measures are unlikely to be rushed, as the quarterly figure was impacted by some one-off factors.
These include a huge inflow of funds from the government as the economy prepares for the Beijing Olympics next year, as well as increased production by exporters as they move to beat new tariffs that have been introduced.
