China Daily reports Guo Shuqing, director of the State Administration of Foreign Exchange, has sounded a warning about
"excessive speculation" in the property market.
"Indiscriminate support of exports and foreign capital influx has created short-term economic problems," said Guo Shuqing, director of the State Administration of Foreign Exchange, according to Xinhua news agency.
The problems include "excessive speculation in the property market and the economic decoupling of the fast-growing coastal areas with the rest of China," Guo was quoted as saying.
The gist is that the Chinese economy is in danger of overheating. Rampant money flows and speculation is feeding inflation that hits the agrarian hinterlands the hardest, as already poor farmers have no leverage to negotiate pay rises that keep up with inflation. This spells social upheavals in the countryside. That has been fodder for one revolution before. And nominally communist the Chinese leadership may be, but they really don't want a new Mao marching in.
These new sounds that it might be time to step on the brake pedal could also have international ramifications, as one of the reasons for the excess of credit in the Chinese market is the printing of Renminbi/Yuan, the Chinese currency, to intervene in the currency markets by buying US Dollars.
This diary is also posted in the Politics/Economy section at Bitsofnews.com.