China policy challenge

--sustain growth without triggering inflation China government is engaging in a delicate balanching act - attempting to cool overheated sectors while increasing investment in other sectors with national priorities --Currency: see stable currency as a key element in their overall effort to promote a stable financial environment. Higher Yuan will slow growth and encourage speculation --A revaluation of the RMB would enable other emerging economies in teh region to raise the value of their currencies. The collective outcome could be a revaluation of regional currencies against the dollar and Euro. --It is mistake to view China as competitive just because of its cheap labor. Increasingly it will be skilled labor and high quality engineers an scientists. --Energy: Russia would build a pipeline to a port in Russian Far East, to ship to China and Japan. --Credit market has turned positive: bank lending to households and corporations picked up. Cause of Asia crisis --balance of payments and banking system: current deficit and pegged currency policy caused currency to devalue.