It was announced today that China’s GDP grew 10.7% last quarter over a year ago, its fastest pace since 2007. There is now speculation that China’s central bank will start raising their benchmark interest rate in order to tighten lending in the country. In fact, China’s central bank last week raised reserve requirements and Chinese authorities have ordered some of China’s largest banks to curb lending for the rest of January.
NIA believes China’s moves to tighten bank lending will strengthen the long-term future of their economy. In the short-term, interest rates will inevitably rise and their GDP growth will decline, but we won’t see a collapse in asset prices in China.