Economics
Goldman Forecaster Urges China to Tighten Monetary Policy
- Real lending rate for companies has turned negative again
- Low real rates fuel borrowing, adding to financial risks
Why Money Keeps Flowing Out of China
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China should tighten monetary policy as signs of overheating emerge amid quickening inflation, according to the top-ranked forecaster for the nation’s economy.
With policy makers torn between reining in price gains and stabilizing growth, corporate lending has become too cheap, said Song Yu, chief China economist at Beijing Gao Hua Securities Co. The real interest rate for companies -- the lending rate minus producer price increases -- has turned negative for the first time since 2011 as the People’s Bank of China kept its benchmark lending rate at a record low and the economy snapped out of a deflationary funk.