A lot of financial analysts and economists are very much concerned about the Chinese economy as they have all observed that overheating of the economy is highly obvious following the official figures that are revealed to the public, showing the inflation that is well above their target.
There was also in increase in the minimum wage in Guangdong. This is the second big increase of China’s biggest provincial economy in just less than 12 months, at a recorded 18 to 26%.
The Chinese economy expanded at a rate of 9.8% during the fourth quarter of 2010 and overall, it grew to a 10.3% for the whole year.
However, a recorded 4.6% was seen in December 2010 by the policymakers as the consumer price inflation rate which is a fall from the 5.1% in November 2010.
Qu Hongbin, one of HSBC’s economists said, “The economic growth figures will encourage Beijing to act more decisively on taming inflation, which means more interest rate hikes are just around the corner.”
On Thursday, the Shanghai composite dropped 2.9% shortly after the announcement of the economic figures of China that are indicative of monetary tightening.
A lot of minimum wage increases have been recorded in a lot of industries in China such as the industrial field combined with an increasing inflation rate. However, the Chinese government is hoping that such action will be able to facilitate the increase in domestic consumption for them to carry on to a low cost manufacturing model as well as low cost on exports and investments.
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