More Hot Money into China
With China’s prospective economic outlook and its appreciating currency, hot money will continue flowing into China.
China’s comparatively quick economic growth still makes it one of the destinations for international speculators, although it’s stock market has become lusterless because of the global turbulence caused by American subprime crisis. Moreover, the central bank has taken several monetary measures, which has proved “effective”, to bring down the main stock index and stem the inflation. For example, raising the reserve requirement ratio 11 times and the benchmark interest rates 6 times since last year to absorb excess liquidity.
As the yuan is rising, it’s difficult for some enterprises to stay in the competitive market. If they wanted to survive in this competition, they had better upgrade their technology and strengthen their competitive power to lessen the impact of rising labor cost and possible energy pricing mechanism.
Even though many investors in China seemed to think the government would do whatever it could to keep stock prices high before the Olympics.
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