Tuesday, April 20, 2010

Is China ready for economic attacks from U.S.?

Chinese Economy@peterpeng210.blogspot.com

In the aftermath of the unhappy result to U.S. on the Nuclear Security Summit, China is preparing for defending probable economic attacks from U.S. Therefore, a series of measures are being taken in China including curb the sizzling real estate prices, raise the domestic retail prices of gasoline and diesel, and try to adjust its economic structure.

These days, Chinese government pushed out new measures on real estate market to limit on people’s speculative behaviours. The measures include higher thresholds of mortgage loans from banks and real name system for real estate purchasing. These measures are fast cooling down the overheated real-estate market and will stop overseas hot speculative money further blowing up China’s inflation bubble.

This month, China also raised its domestic retail prices of gasoline and diesel. It has enhanced China’s management on inflation anticipation and up-levelled China’s immunity to the risk of international price soaring on crude oil in the future.

In May of 2010, U.S. will decide whether Chinese government is a manipulator of its currency. To the probable anti-measure from U.S., China has decided to take it as an opportunity to change and modify its economic structure, although the process may be painful. China is adjusting its economic structure to one that less relies on exports.

To reduce risks from the devaluation of U.S dollars, China will reduce holding of U.S. treasury bonds and switch from mainly buying long-term U.S. treasury bonds to buying short-term ones. China will also change from mainly purchasing U.S. treasury bonds to purchasing famous brand names, shares of blue-chip enterprises in the world, for example, the Jeely and Volvo project. Meanwhile, China will invest more in world resources, for example, Venezuela Junin 4 block oil project, Canadian iron ore mining, etc.

China has been ready to slow down its developing steps to go through an upcoming painful journey in facing attacks from U.S. on economy.