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Political Overlords Shackle China's Monetary Mandarins
WSJ ^ | 04/15/11 | BOB DAVIS

Posted on 04/17/2011 5:30:38 AM PDT by TigerLikesRooster

MARKETS APRIL 15, 2011.

Political Overlords Shackle China's Monetary Mandarins

By BOB DAVIS

BEIJING—China's premier, Wen Jiabao, warned last month that inflation is like a tiger—once unleashed, it is "very hard to cage again."

Amid growing worries over inflation in China, many question what the People's Bank of China can do to put on the brakes without dampening rapid economic growth. WSJ's Bob Davis explains to David Reilly the complications of adjusting policy in the country.

Yet Beijing has been slow to pounce, even though food prices are rising at a nearly 12% annual clip and overall inflation hit 5.4% in March, according to numbers released Friday, more than twice the pace of a year ago. The steps it has taken thus far, including last week's 0.25% interest-rate increase, have been modest.

If it had been solely up to the People's Bank of China, the nation's central bank, the inflation-busting would have begun sooner, according to people involved in the matter. But the process of fighting inflation here is Byzantine, much like the Chinese government itself.

Monetary policy in the world's second-largest economy involves dueling bureaucracies, secretive committees and a Communist Party whose influence is hidden but pervasive, these people say. No single official is in charge, making it nearly impossible for other leading nations to coordinate economic policy with China.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Foreign Affairs; News/Current Events
KEYWORDS: bureaucracy; china; inflation; politics
Monetary policy in the world's second-largest economy involves dueling bureaucracies, secretive committees and a Communist Party whose influence is hidden but pervasive, these people say. No single official is in charge,...

Sounds like Japan caught in Fukushima crisis. This is not a news, though.

1 posted on 04/17/2011 5:30:44 AM PDT by TigerLikesRooster
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To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...

P!


2 posted on 04/17/2011 5:31:40 AM PDT by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
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To: TigerLikesRooster

” Monetary policy in the world’s second-largest economy involves dueling bureaucracies, secretive committees and a Communist Party whose influence is hidden but pervasive, these people say. No single official is in charge,... “

Hmmmmm.....

In other words, the ‘second-largest economy’ is becoming just like the ‘first-largest economy’......


3 posted on 04/17/2011 5:34:50 AM PDT by Uncle Ike (Rope is cheap, and there are lots of trees...)
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To: TigerLikesRooster; All

But, but....the Free Traders will say that such Statism and Big Government is good....that we should continue to have massive trade deficit and debt with Communist China....


4 posted on 04/17/2011 5:42:20 AM PDT by UCFRoadWarrior (Now, I can't tell the difference between Karl Rove and Karl Marx)
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To: TigerLikesRooster

In order to maintain the exchange rate with the dollar, they have to print money to buy up dollars at the fixed rate. So if we print money, the inflation turns up in China.

If they want to stop inflation, they will have to allow their currency to strengthen.


5 posted on 04/17/2011 5:44:25 AM PDT by proxy_user
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To: TigerLikesRooster

China is buying private gold...all they can get and paying spot + prices. They are actively scouring the Pac Rim for old coins and jewelery.


6 posted on 04/17/2011 5:49:13 AM PDT by Tainan (Cogito Ergo Conservitus.)
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To: proxy_user
they will have to allow their currency to strengthen.

Current Chinese regime is not known for breaking status quo, no matter how damaging it would be in the long run. Just as U.S. keeps printing money, they will, too. Both will go down together.

7 posted on 04/17/2011 5:53:13 AM PDT by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
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To: Tainan
In old China, warlords plundered ancient graves for buried treasures to bankroll their army. Cao Cao was the most notable one.

Is Chicom up to something along that line? When the bad day comes, the money to pay their army is essential to their survival.

8 posted on 04/17/2011 5:58:49 AM PDT by TigerLikesRooster (The way to crush the bourgeois is to grind them between the millstones of taxation and inflation)
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To: UCFRoadWarrior
But, but....the Free Traders ...

I believe you are referring to the phoney free traders, who are essentially import unilateralists. The import lobby knows nothing of the state-made barriers to our exports nor cares...nor will they acknowledge the damage to everything from job quality, national security, and the integrity of the dollar.They are, and always have been, selfish traitors.

9 posted on 04/17/2011 7:13:37 AM PDT by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: TigerLikesRooster
Personally, I think they are expecting the US$ to plummet in value and do not really trust the Euro for long-term stability, or even to 'be' long-term.
My current guess is they will try to establish the yuan as the world benchmark currency in the coming years.
Just my guess. China ALWAYS takes a long view towards things.
10 posted on 04/17/2011 4:57:45 PM PDT by Tainan (Cogito Ergo Conservitus.)
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