Peking tries to cool things down: Teresa Poole describes moves to rein in a rapidly overheating economy
Tuesday 18 May 1993
After months during which the 'O' word - 'overheating' - seemed to have been banned from official discource, the state media and senior officials are openly talking about the need to rein in the economy.
First-quarter inflation ran at an annual rate of 8.6 per cent for the whole country but reached 15.7 per cent in 35 big cities. During the same period the economy grew at an annual rate of 14 per cent compared with official forecasts of 8 or 9 per cent.
China Daily at the weekend reported splurge buying in Peking of colour television sets, refrigerators and hi-fi equipment amid sharply rising prices for household electrical appliances. One shopping centre reported a sixfold increase in the sales of imported television sets.
Economists were encouraged that China was showing some resolve to deal with the inflationary problems before they got out of hand. But many point to the difficulties that the central government would have in trying to impose any austerity measures on fast-growing provinces where economic reform has taken on a life of its own, backed by huge investment in new projects.
The central authorities are also limited in what they can do. The increase in bank loan rates was limited to 0.82 of a percentage point. Any increase will immediately hit the debt-ridden, loss-making state industries that are already being bailed out by the government.
Rates for deposits have gone up more, with fixed-term savings rates increasing by 2.18 points to persuade people to keep their money in the bank.
Analysts agree that the increases sent the right signal but say they will not be enough to cool the economic fever. Even now rates remain below 10 per cent. Baring Securities estimates that inflation this year will reach 12 per cent across the country and 17 per cent in the big cities.
Other measures have been announced. Provincial banks have been told not to lend so much and there has been a squeeze on funds available for speculative property development and on the issue of company shares.
Inflationary pressures are huge. Consumers have cash in their pockets and a wide range of goods to spend it on. Many of these come from abroad, making a trade deficit likely this year.
The renminbi is already taking the strain, falling to 10 to the dollar on the black market against an official rate of 5.76.
Regular cast member Ste Hay, played by Kieron Richardson, is about to test TV boundaries
- 1 Lee Evans announces retirement from comedy on The Jonathan Ross Show
- 2 Pirelli calendar 2015: The problem with 'plus-size' models like Candice Huffine
- 3 These grandmas smoking weed for the first time are wonderful
- 4 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 5 Angelina Jolie confuses everyone with 'ay up me duck' East Midland's greeting to Derby actor Jack O'Connell at awards show
Jeff Fletcher dead: Britpop guitarist is decapitated by lorry in horrific traffic accident
These grandmas smoking weed for the first time are wonderful
Jimmy Ruffin dead: Motown legend, who wrote 'What Becomes of the Brokenhearted', dies aged 78
New York snowstorm: Five dead and state of emergency declared as 'wall of snow' buries Buffalo
Woman opens professional cuddling shop – gets 10,000 customers in first week
G20 summit: Enter Putin. Accompanied by four warships. To the sound of mockery
'Muslims pre-date Columbus in discovering America,' says Turkish president Erdogan
David Cameron 'compares Vladimir Putin’s Russia to Nazi Germany' ahead of tense meeting
Former Tory PM Sir John Major says 'we would not have an NHS without migrants'
France 'blocks' Russian sailors from boarding a warship
G20 summit: David Cameron warns Vladimir Putin that Russia's relationship with the West is at a 'fork in the road' over Ukraine
iJobs Money & Business
£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
$175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...
Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...