China Near Recession in Rate-Cut ‘Panic,’ Asianomics Says
China’s first interest rate cut since 2008 and loosened controls on lending and deposit rates are a “sign of panic” and will not do anything to boost the economy, Jim Walker, chief economist at Asianomics Ltd. said.
“The timing is a surprise but I suspect it demonstrates just how weak the Chinese economy really is,” Hong Kong-based Walker said today in an e-mail. “We believe that it is pretty close to recession.”
China’s rate cut may signal that the world's second- biggest economy is weaker than the government anticipated, with reports on inflation, investment and output in May due to be released tomorrow. The move is a signal that “the whole world is heading into recession,” according to Walker.
The central bank's move may backfire if it “further dissuades people from putting money into savings and time deposits,” Walker said. “If anything, banks will need to raise their lending rates because their cost of funds is going up.”
Walker was formerly chief economist at CLSA Asia-Pacific Markets and was voted the best regional economist in an Asiamoney magazine brokers’ poll for 11 years through 2004.
To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
China Near Recession Amid Rate-Cut ‘Panic,’ Asianomics Says
Nelson Ching/Bloomberg
Security guards sit near residential housing in Miyun County, Beijing, China. China’s rate cut may signal that the world's second-biggest economy is weaker than the government anticipated, with reports on inflation, investment and output in May due to be released tomorrow.
Security guards sit near residential housing in Miyun County, Beijing, China. China’s rate cut may signal that the world's second-biggest economy is weaker than the government anticipated, with reports on inflation, investment and output in May due to be released tomorrow. Photographer: Nelson Ching/Bloomberg
June 8 (Bloomberg) -- Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, talks about the nation's economy and monetary and fiscal policies. China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth. Zhu speaks with Rishaad Salamat on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
June 8 (Bloomberg) -- Tomo Kinoshita, deputy head of Asia economic research at Nomura International, talks about China's economy and central bank monetary policy. China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth. Kinoshita speaks in Hong Kong with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
June 8 (Bloomberg) -- Shen Jianguang, chief Asia economist for Mizuho Securities Asia Ltd., talks about China's economy and central bank monetary policy. China cut borrowing costs for the first time since 2008 and loosened controls on banks’ lending and deposit rates, stepping up efforts to combat a deepening slowdown as Europe’s debt crisis threatens global growth. Shen speaks in Hong Kong with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
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