China has started to pull in the reins on loans and liquidity to fend off inflationary pressures to prevent the world’s third-largest economy from overheating. These policy measures come amid the reporting of China’s fourth quarter GDP growth of over 10%.
The moves have concerned international financial markets as China’s economy has largely led a global recovery despite persistently weak demand in Western countries. However, analysts at Tortola Capital note that the steps taken so far will do little to curb its insatiable demand for commodities and other imported goods.
China’s economy grew at its quickest quarterly rate in over two years in the fourth quarter this year. Inflation accelerated and set the stage for more fiscal tightening in coming months. Tortola Capital analysts predict one to two interest rate hikes this year, with the first possibly before July.