Questions Emerge About The Foundations And Future Of China’s Economic Growth

Tuesday, January 18, 2011 07:04
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Questions Emerge About The Foundations And Future Of China’s Economic Growth

China is drawing an immense amount of interest from investors as its currency becomes more important and its economy continues to grow. But some analysts are warning that the China story may be too good to be true.
 

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A new book, “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise,” paints a picture of a country where the government continues to run the economy while hiding debt and inflating asset values. This New York Times interview with one of the book’s author’s shows why advisors should proceed with caution when it comes to investing in China’s companies or currency.

 


In the meantime, the Wall Street Journal covered a financial conference that took place in Hong Kong Monday, and this story details the questions that were raised at the conference over the rise of the Chinese currency, the yuan. Business and government officials alike expressed concern over the potential for rampant speculation and undue risk should the yuan continue its rise at too fast a pace.


Indeed, concern about China’s tightening monetary policy has led to jitters in Chinese markets, with Chinese share’s hitting a 15-week low on Monday.
 

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