The risk posed by asset bubbles in Asia is overstated because surging prices in markets don’t threaten regional economies, said Stephen Roach, chairman of Morgan Stanley Asia Ltd.
“The difference between the asset bubbles in this region and asset bubbles also around the world is that they have not affected the real side of the Asian economy,” Roach said in an interview in Hong Kong yesterday.
Concerns about inflation in Asia are “overblown” as excess capacity in the global economy is likely to keep a “lid” on prices for the next few years, said Roach, author of The Next Asia. “Beyond that, it’s a big challenge.”
Standard & Poor’s warned yesterday that Asian policy makers may fuel asset bubbles by leaving interest rates “too low for too long” as the region leads a global recovery from the worst slowdown since World War II. Stock and property markets are looking “frothy” in Asia, said David Wyss, an economist at S&P.
The US had “monster bubbles in property credit that ended up stalling home-building activities and personal consumption” and when they burst the “economy went into the tank,” Roach said. In contrast, in Asia “you have bubbles that come and go, but they don’t impact on the real economy.”
Roach also said that Chinese Premier Wen Jiabao’s (溫家寶) past warnings that his nation’s growth path is “unbalanced and unsustainable” have become a “serious concern now.”
“Two of the main engines of the Chinese economy, exports and investments, really have reached their point of maximum dynamism,” Roach said. “The Chinese need to change the model and move much more into consumer-led” growth, he said.
China’s central bank last month ordered banks to set aside more deposits as reserves for the second time in a month to cool the economic expansion after loan growth accelerated and property prices surged 9.5 percent in January, the most in 21 months. The China Banking Regulatory Commission told banks the same month to “strictly” follow property lending policies.
China’s consumer prices increased 1.5 percent in January from a year earlier, mainly due to gains in food costs resulting from the cold winter weather, the National Bureau of Statistics said. The gauge rose 0.6 percent from December.
In the fourth quarter of last year, the Chinese economy grew 10.7 percent from a year earlier, the fastest pace since 2007.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
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