

Currently released so far... 12648 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
2011/05/01
2011/05/02
2011/05/03
2011/05/04
2011/05/05
2011/05/06
2011/05/07
2011/05/08
2011/05/09
2011/05/10
2011/05/11
2011/05/12
2011/05/13
2011/05/14
2011/05/15
2011/05/16
2011/05/17
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy Niamey
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sapporo
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
AORC
AF
AU
ASEC
AMGT
AS
APER
AR
AG
ARF
AJ
AA
AINF
APECO
AODE
ABLD
AMG
ATPDEA
AE
AEMR
AMED
AGAO
AFIN
AL
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
AID
ASCH
AM
AORL
ASEAN
APEC
ADM
AFSI
AFSN
ADCO
ABUD
AN
AY
AIT
AGR
ACOA
ANET
ASIG
AMCHAMS
AGMT
AADP
ADPM
ATRN
ALOW
ACS
APCS
AFFAIRS
ADANA
AECL
ACAO
AORG
AROC
AO
ACABQ
AX
AMEX
AFGHANISTAN
AZ
AND
ARM
AQ
ATFN
AMBASSADOR
ACBAQ
AC
AUC
ASEX
AER
AVERY
AGRICULTURE
AFU
BR
BTIO
BY
BO
BA
BU
BL
BN
BM
BF
BEXP
BK
BG
BB
BTIU
BBSR
BRUSSELS
BD
BIDEN
BE
BH
BILAT
BC
BX
BT
BP
BMGT
BWC
CS
CA
CH
CD
CO
CE
CU
CVIS
CASC
CJAN
CI
CPAS
CMGT
CDG
CIC
CAC
CBW
CWC
COUNTER
CW
CT
CY
CNARC
CACM
CG
CB
CM
CV
CIDA
CLINTON
CHR
COE
CR
CIS
CDC
CONS
CF
CODEL
COPUOS
CIA
CFED
CARSON
CL
CROS
CAPC
CTR
CACS
CN
CBSA
CEUDA
COM
CONDOLEEZZA
CICTE
COUNTRY
CBE
CKGR
CVR
COUNTERTERRORISM
CITEL
CLEARANCE
CARICOM
CSW
CITT
CDB
CJUS
CTM
CAN
CLMT
CBC
EAID
ECON
EFIS
ETRD
EC
ENRG
EINV
EFIN
EAGR
ETTC
ECPS
EINT
ES
EIND
EAIR
EU
EUN
EG
EPET
ELAB
EWWT
EMIN
ECIN
ESA
ER
ETRDEINVECINPGOVCS
EAIG
ET
ETRO
ELTN
EI
EN
EUR
EK
EUMEM
EPA
ENGR
EXTERNAL
EUREM
ELN
EUC
ENERG
ENIV
EZ
ERD
EFTA
ETRC
ETRN
EINVECONSENVCSJA
EEPET
EUNCH
ESENV
ENNP
ENVI
ETRDECONWTOCS
ECINECONCS
EFINECONCS
ELECTIONS
ENVR
EXIM
ERNG
ECA
EINVEFIN
ETC
EAP
ECONOMY
EINN
ECONOMIC
EXBS
ECUN
ENGY
ECONOMICS
EIAR
EINDETRD
ECONEFIN
EURN
EDU
ETRDEINVTINTCS
ECIP
EFIM
EAIDS
EREL
EINVETC
ECONCS
ETRA
IC
IV
IAEA
IR
IO
IT
IN
IS
IZ
IMO
IPR
IWC
ICAO
ILO
ID
ICTY
ICJ
INMARSAT
INDO
IL
IMF
IRS
IQ
IA
ICRC
IDA
IAHRC
IBRD
ISLAMISTS
IGAD
ILC
ITU
ITF
INRA
INRO
IDP
ICTR
IEFIN
IRC
ITRA
ITALY
INRB
INTELSAT
IBET
IRAQI
ISRAELI
IIP
ITPGOV
ITALIAN
INTERNAL
INTERPOL
IEA
INR
IZPREL
IRAJ
IF
ITPHUM
ISRAEL
IACI
KBTR
KPAO
KOMC
KCRM
KDEM
KHIV
KBIO
KTIA
KMDR
KNNP
KSCA
KTIP
KWMN
KIPR
KCOR
KRVC
KFRD
KPAL
KWBG
KE
KTDB
KUNR
KSPR
KJUS
KGHG
KAWC
KCFE
KGCC
KOLY
KSUM
KACT
KISL
KTFN
KFLU
KSTH
KMPI
KHDP
KS
KHLS
KMRS
KID
KN
KU
KAWK
KSAC
KCOM
KAID
KIRC
KWMNCS
KMCA
KNEI
KCRS
KPKO
KICC
KPOA
KV
KDRG
KIRF
KSEO
KVPR
KSEP
KTER
KBCT
KFIN
KGIC
KCIP
KZ
KG
KWAC
KRAD
KPRP
KTEX
KNAR
KPLS
KPAK
KSTC
KFLO
KSCI
KIDE
KOMS
KHSA
KSAF
KPWR
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KFSC
KRIM
KVRP
KENV
KNSD
KCGC
KDDG
KPRV
KTBT
KWMM
KMFO
KMOC
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KPAI
KO
KVIR
KREC
KX
KR
KCRCM
KBTS
KOCI
KGIT
KNUP
KPAONZ
KNUC
KNNPMNUC
KERG
KTLA
KCSY
KTRD
KNPP
KJUST
KCMR
KRCM
KCFC
KCHG
KREL
KFTFN
KLIG
KDEMAF
KICA
KHUM
KSEC
KPIN
KESS
KDEV
KWWMN
KOM
KWNM
KRFD
KMIG
KRGY
KIFR
MARR
MOPS
MASS
MX
MNUC
MCAP
MO
MR
MEPP
MTCRE
MAPP
MEPN
MZ
MT
ML
MA
MY
MIL
MD
MASSMNUC
MU
MK
MTCR
MUCN
MAS
MEDIA
MAR
MC
MI
MQADHAFI
MPOS
MTRE
MASC
MG
MARAD
MRCRE
MW
MP
MOPPS
MTS
MLS
MILI
MEPI
MEETINGS
MERCOSUR
MCC
MIK
MAPS
MV
MILITARY
MDC
NATO
NZ
NL
NO
NK
NU
NPT
NI
NG
NEW
NSF
NA
NPG
NSG
NE
NSSP
NS
NDP
NSC
NAFTA
NH
NV
NP
NPA
NSFO
NT
NW
NASA
NORAD
NATIONAL
NGO
NR
NIPP
NZUS
NC
NRR
NAR
NATOPREL
OEXC
OTRA
OPRC
OVIP
OAS
OIIP
OSCE
OREP
OPIC
OFDP
OMIG
ODIP
OVP
OSCI
OIC
OECD
OIE
OPDC
ON
OCII
OPAD
OBSP
OFFICIALS
OPCW
OHUM
OES
OCS
OTR
OSAC
OFDA
PGOV
PREL
PM
PHUM
PTER
PINR
PINS
PREF
PARM
PL
PK
PU
PBTS
PBIO
PHSA
PE
PO
PROP
PA
PNAT
POL
PLN
POLITICAL
PARTIES
PCUL
PAK
PGGV
PAO
PSA
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PAS
PGIV
PHUMPREL
PCI
PG
POGOV
PHUMPGOV
PEL
POLITICS
POLICY
PINL
PP
PREO
PAHO
PBT
PMIL
POV
PRL
PDOV
PTBS
PRAM
PREFA
PSI
PAIGH
POSTS
PALESTINIAN
PARMS
PROG
PTERE
PRGOV
PORG
PS
PGOF
PKFK
PSOE
PEPR
PPA
PINT
PMAR
PRELP
PINF
PNG
PFOR
PUNE
PGOVLO
PHUMBA
PSEPC
PNR
POLINT
PGOVE
PHALANAGE
PARTY
PDEM
PECON
PROV
PGOC
PY
PHUH
PF
PHUS
RU
RS
RO
RW
RP
RFE
REGION
REACTION
REPORT
ROOD
RCMP
RM
RSO
ROBERT
RICE
RSP
RF
RIGHTS
RIGHTSPOLMIL
RUPREL
RELATIONS
SENV
SU
SCUL
SOCI
SNAR
SL
SW
SMIG
SP
SY
SA
SHUM
SZ
SYRIA
SF
SR
SO
SARS
SN
SC
SIPRS
SI
SYR
SEVN
SG
SPCE
SK
STEINBERG
SH
SNARCS
SAARC
SCRS
SENVKGHG
SAN
ST
SIPDIS
SNARIZ
SNARN
SSA
SPCVIS
SOFA
SEN
SANC
SWE
SHI
TW
TU
TBIO
TSPL
TPHY
TRGY
TC
TT
TSPA
TINT
TERRORISM
TX
TR
TS
TN
TD
TH
TIP
TNGD
TI
TZ
THPY
TP
TBID
TF
TL
TV
TK
TO
TRSY
TURKEY
TFIN
TAGS
UN
UK
UNSC
UNGA
US
UNESCO
UP
UNHRC
UNAUS
USTR
UNDP
UNEP
UY
UNCHR
UG
UZ
UNPUOS
USEU
UNMIK
UNDC
UNICEF
UV
UNHCR
UNCHC
UNCSD
USOAS
UNFCYP
USUN
USNC
UNIDROIT
UNO
UNCND
USPS
USAID
UE
UNVIE
UAE
UNODC
UNCHS
UNFICYP
UNDESCO
UNC
Browse by classification
Community resources
courage is contagious
Viewing cable 10BEIJING352, CHINA: S&ED II DATES AND TOPICS; RMB APPRECIATION; ECONOMIC
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #10BEIJING352.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
10BEIJING352 | 2010-02-10 09:07 | 2010-12-26 21:30 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Beijing |
VZCZCXRO0314
PP RUEHCN RUEHGH
DE RUEHBJ #0352/01 0410907
ZNR UUUUU ZZH
P 100907Z FEB 10
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 8056
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 BEIJING 000352
SENSITIVE
SIPDIS
STATE PASS USTR
TREASURY PASS LOEVINGER
E.O. 12958: N/A
TAGS: ECON EFIN EINV ETRD CH
SUBJECT: CHINA: S&ED II DATES AND TOPICS; RMB APPRECIATION; ECONOMIC
SITUATION
This cable is Sensitive but Unclassified (SBU) and for official use
only. Not for transmission outside USG channels.
¶1. (SBU) SUMMARY: During a January 25-28 visit to advance
preparations for the U.S.-China Strategic and Economic Dialogue II
(S&ED II), the U.S. Economic Track staff delegation met with key
economic ministries, economists, and U.S. industry representatives.
The delegation proposed to their Ministry of Foreign Affairs (MFA)
and Ministry of Finance (MOF) interlocutors the week of May 10 for
the Dialogue and agreed to exchange outcomes in early March. The
group made progress on the public agenda, although the Chinese side
noted that it would have difficulty openly including exchange rates
and relative prices on the agenda, and resisted listing discussion
of China's indigenous innovation policy. Officials were open to
continuing private discussions about RMB appreciation, but
reiterated China could not be seen as caving to foreign pressure on
the currency issue. Turning to China's economic situation, contacts
noted that economic overheating and real estate asset bubbles
remained an area of concern for Beijing's economic policymakers.
END SUMMARY.
¶2. (SBU) The delegation met: Ministry of Commerce (MOFCOM) American
and Oceanic Affairs Director General (DG) He Ning; Ministry of
Finance (MOF) External Economic Cooperation DG Zou Jaiyi; National
Bureau of Statistics (NBS) DG Li Xiaochao; China Construction Bank
(CCB) Chief Economist Erh-Cheng Hwa; National Development and Reform
Commission (NDRC) Cong Liang; State Administration for Foreign
Exchange (SAFE) Capital Controls Deputy DG Chu Yumei; UBS economist
Wang Tao; Central Finance and Economic Leading Group (CFELG) Vice
Minister Liu He; MOF Assistant Minister Zhu Guangyao; Chinese
Academy of Social Sciences (CASS) Professors Huang Ping and Xiao
Lian; Chinese Institute for Contemporary International Relations
(CICIR) Professor Da Wei; China Center for Economic Research (CCER)
Scholar Lu Feng; Development Research Center (DRC) Scholar Tang Min;
Managing Director of Hill and Knowlton John Holden; Oshkosh Senior
Director of Business Development Jennifer Thompson; Akin, Gump,
Strauss, Hauer & Feld LLP Partner Spencer Griffith; and IBM Global
Services Deputy Chief Representative She Duan Zhi.
¶3. (SBU) State Department Deputy Assistant Secretary for China and
Mongolia David Shear and Treasury Department Executive Secretary and
Senior Coordinator for China and the S&ED David Loevinger led the
State-Treasury S&ED II planning trip to Beijing. The Economic Track
delegation also included: Economic Minister Counselor William
Weinstein; Treasury Attache David Dollar; Senior Advisor to the
Treasury Under Secretary-designate for International Affairs Raji
Jagadeesan; Director of Treasury's Office of East Asia Chris
Winship; State Department Deputy Director, Office of Monetary
Affairs David Meale; Assistant to the U.S.-China Strategic and
Economic Dialogue Casey Owens; Deputy Financial Attache to China
(incoming) Tim Dorsett; and Embassy EconOffs.
S&ED Planning
--------------
¶4. (SBU) On preparations for the Economic Track of the S&ED, neither
MFA nor MOF officials replied to the U.S. proposal to hold the
Dialogue during the week of May 10, and reiterated China's
preference for late May. In a meeting with MOF Assistant Minister
Zhu Guangyao, the two sides agreed to exchange proposed Economic
Track outcomes in early March. Searching for mutually acceptable
phrasing for the public agenda, MOF DG Zou Jiayi, observing that the
two sides were "quite close" on most points, said the most difficult
area for MOF was exchange rates and relative prices. She preferred
not to use exchange rates in the document, as that would attract too
much focus, but said the term relative prices was too narrow. Zou
also mentioned that the Ministry of Science and Technology (MOST)
did not want to discuss the indigenous innovation issue at the S&ED,
but hoped to be able to discuss it bilaterally prior to the S&ED;
Zou agreed to convey USG views back to MOST.
Exchange Rates/RMB Appreciation a "Political Issue"
--------------------------------------------- ----
¶5. (SBU) Officials demonstrated little outward receptivity to the
message of RMB appreciation. MOFCOM DG He Ning rejected U.S. calls
for RMB appreciation, claiming that political pressure from the
economic situation in the United States and other countries should
not be shifted onto China in the form of a call for RMB
appreciation. He pointed out that in 2009 Chinese exports to the
United States had dropped 12 or 13 percent, vice an only four
percent drop in imports from the United States, without any change
in the exchange rate. State Council Economic and Financial Leading
Group Vice Minister Liu He noted the currency issue was no longer an
economic issue, but more of a "political issue for both sides." Liu
explained that exports, while slower, had still helped China
BEIJING 00000352 002 OF 002
successfully create new jobs this year, keep the unemployment
rate--and thus the political system--fairly stable.
¶6. (SBU) Assistant Finance Minister Zhu Guangyao agreed that both
China and the United States faced political constraints and
pressures with regard to the exchange rate, and urged Washington and
Beijing to maintain open communication to manage this issue and keep
it out of the public eye as long as possible. Zhu also pointed out
that China was worried about inflows of hot money, stemming at least
in part from low U.S. interest rates.
¶7. (SBU) On the other hand, private economists agreed that Chinese
officials likely favored a return to gradual appreciation of the
RMB, despite the possibility of attracting speculative capital
inflows. UBS economist Wang Tao, for example, expected a move
mid-year, with a near-term goal of five percent appreciation by
year-end 2010. China Construction Bank Vice President/Chief
Economist Hwa Erh-cheng agreed that the exchange rate was a
"challenge" for the People's Bank of China (PBOC), and even though
the PBOC might be forced to allow appreciation, it would only be
incremental because the international environment remained fragile
and the export recovery was not strong. Predicting that the RMB
would rise about three percent in 2010 and five percent in 2011, Hwa
concluded that it was unlikely to be a "one-shot" change (e.g. a
jump appreciation). China knows it needs to increase domestic
demand and consumption to stabilize growth and adjust economic
structure in 2010, so the exchange rate issue must eventually be
"part of the equation." However, Hwa asserted that the Chinese
Government "will not be influenced by a Dialogue."
Rising Housing Prices/ Overheating
---------------------------------
¶8. (SBU) On an overheating economy, Vice Minister Liu He pointed to
asset bubbles as a potential problem for China's recovery and noted
that people are withdrawing money from banks to invest in assets.
Liu did not yet see the problem as serious. As a reaction to the
trend, the China Banking and Regulatory Commission (CBRC) has
instituted requirements to deter speculation, and the State Council
has ordered measures to tighten credit and mandated monitoring of
state-owned enterprise (SOE) investment in real estate. NBS DG Li
Xiaochao noted that the real estate sector is important to the
economy because it boosts both consumption and investment; however,
housing prices jumped 7.8 percent in December, which was a worrisome
sign of over-investment and speculation in real estate. On
inflation, Li claimed that, although 2009 saw negative inflation,
November and December numbers turned positive. Bad weather in
December and January, together with the government's proactive
fiscal policy, had generated inflationary pressure.
¶9. (SBU) CCB Vice President/Chief Economist Hwa Erh-cheng said the
Chinese Government is actively trying to cool the real estate
market. Because private companies have been blocked from investing
in the service sectors, more investment has flowed to real estate,
increasing housing prices by as much as 50 percent in coastal
cities. Further adding to the problem, SOEs have out-bid private
companies, pushing up land prices. To deter speculation, Hwa said,
the CBRC has required banks to disburse loans to real estate
suppliers rather than buyers. The market has started to believe
that the government will continue to tighten monetary conditions to
control overheating.
¶10. (U) The delegation cleared this cable.
HUNTSMAN