Does Beijing think its largest state banks are headed for trouble?
On Tuesday, the Shanghai Securities News reported that a Chinese official at the State Information Office hinted that the country’s central bank, in order to stem deflation, will lower bank interest rates. Consumer and producer prices have been declining in China in the last several months, but most analysts think inflation will return by the end of the year when the economy picks up speed due to Premier Wen Jiabao’s stimulus program. In short, no one actually believes deflation is a problem.
