From: usenet@alma-services.abel.co.uk   
      
   Economists: Prepare for US monetary reversal   
      
   (Xinhua)   
   Updated: 2008-07-01 18:54   
      
      
   BEIJING  -- Economists are warning policy makers in China to prepare for   
   a reversal in US monetary policy to tightening during the second half of   
   2008.   
      
   Market analysts said they expected the US Federal Reserve Board to raise   
   interest rates in the second half of the year, as inflation risks began   
   to outweigh recession fears in the world's largest economy.   
      
   An expected strengthening of the US dollar following such a rate hike   
   would divert speculative funds ("hot money") from emerging markets to   
   the United States, increase the burden on countries with heavy foreign   
   debts, and cause a regional economic crisis, He Fan, an economist at the   
   Chinese Academy of Social Sciences (CASS), said in a report released on   
   Tuesday.   
      
   China, with hundreds of billions of US dollars in "hot money" that had   
   already poured into the country, should closely watch the adjustment of   
   US monetary policy and take much stricter measures to monitor capital   
   flows in the meantime, said He.   
      
   "Hot money" outflows alone would not be so worrisome; it was the tight   
   money supply that would follow the outflow that was of concern, said   
   CASS economist Zhang Ming.   
      
   China's policy makers should closely monitor the situation and make   
   timely adjustments to monetary policy, said Zhang.   
      
   The anticipated US monetary policy shift was also likely to cause price   
   falls of dollar-denominated commodities such as grain and crude oil,   
   which would help ease China's steep inflation, according to professor   
   Huo Deming of the China Center for Economic Research at Peking University.   
      
      
   http://www.chinadaily.com.cn/china/2008-07/01/content_6810901.htm   
      
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