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CHINA’S ECONOMY: ENTERING TROUBLED WATERS? Oscar Monterroso Chief Economist Central Bank of Guatemala May 9, 2008
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China´s Rapid Growth Finally Ignites Overheating? Source: Global Insight
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China´s Liquidity Growth Remains High Despite Rate Hikes Source: Global Insight
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Excess Liquidity Has Not Yet Pressured CPI Inflation … Source: Global Insight
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… But Has Inflated the Asset Markets Source: Global Insight
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Price Control Has Kept China´s Domestic Energy Prices Long Under International Prices Source: Global Insight and Bloomberg
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Exports to U.S. Main Drag on Recent Chinese Export Growth Source: Global Insight
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Chinese Export Outlook Depends on Whether the U.S. Will Drag the Global Economy Source: International Monetary Fund
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U.S. Recession Impactful on Chinese Exports Source: Consensus Forecast
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Economy could get squeezed domestically and externally. Monetary policy tightening has started Exports to the U.S. already slowing Policy dilemma – exports and investment/inflation in different phases of cycle and require countering policies. Without inflation risk, Beijing is willing to continue loose monetary policy to cushion the impact of sliding exports. Inflation is key! Conclusion
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May, 2008
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