China's unexpected move to tighten its monetary policy has focused attention on the Chinese economy and whether further moves would threaten the world status quo.

The big news over the last week was that China decisively moved to start winding back the stimulus it provided to combat the global financial crisis by raising the required level of reserves that banks must set aside by 0.5 per cent (taking it to 16 per cent for large banks). With the Chinese economy growing strongly, and worries that imbalances will build, further tightening is likely. However, while this will likely cause bouts of volatility in Chinese shares and global financial markets, China is a long way from undertaking a draconian tightening designed to crunch growth. We continue to expect Chinese GDP growth of around 10 per cent this year. As a result, Chinese tightening is unlikely to threaten the rising trend in shares this year, albeit it will, along with tightening elsewhere, result in a more volatile ride.

The dispute between Google and China is also worth keeping an eye on to the extent that it could potentially have a broader corrosive effect on bilateral relations between the US and China if it is allowed to get out of hand.



{{ twilioFailed ? 'SMS Code Failed to Send…' : 'An SMS verification code has been sent ...' }}

Hi {{ user.FirstName }}

Looks like you have already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to complete your SMS verification

We cannot send you a code via SMS to {{user.DayPhone}}

If you didn't receive SMS code please

SMS code cannot be sent due to: {{ twilioStatus }}

Please select one of the options below:

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device

Verify your mobile number to proceed...

Please check your mobile number below and press the Send Verification Code button. This will be used to complete your verification in the next step.

Please sign up for full access


Updating information

Please wait ...


{{ productPrice }} / day
( GST included )
Price $0
GST $0
Discount -{{productDiscount}}
TOTAL {{productPrice}}
  • Mastercard
  • Visa

Please click on the ACTIVATE button to finalise your membership


The email address you entered is registered with InvestSMART.

Please login or select "Don't know password"

Please untick this box when using a public or shared device

Register as a new member

(using a different email)

Related Articles