The People’s Bank of China said Saturday that it will raise interest rates for a second time in the current cycle as the government steps up its fight against inflation. The 25 basis point increases in one-year deposit and lending rates will take effect December 26, the central bank said. They follow rate hikes which came into effect on October 20. – iMarketNews
From a particular point of view, there is going to be an unstableness and as a result, there will break up in the manufacturing sector. Foreign companies are not going to be too happy. Expect Vietnam (especially Southeast Asia)and Mexico to be the winners when China hits the skid. The genuine problem of China is their fixation with F/X reserves. The cost of maintaining the reputed “value” of these reserves is bankrupting China.