This news from the Chinese leader should calm the market fear about aggressive rate hike from China. This should support base metals and $A so looking for a weak SPI open around 4500 or below and long play is worth a risk.
Good luck
Bulletin Investor Alert Jan. 30, 2010, 11:45 a.m. EST
No change for China's monetary, currency policies
By William L. Watts, MarketWatch DAVOS, Switzerland (MarketWatch) -- China will maintain an accommodative monetary policy, aiming for annual economic growth of 8% to 9%, People's Bank of China deputy governor Zhu Min told the World Economic Forum's annual meeting Saturday.
The bank won't be making any changes in its currency policy, either, he said, until national governments begin a coordinated withdrawal of monetary and fiscal policy measures, he said. China has resisted criticism from the United States, Europe and others that the yuan's peg to the dollar unfairly undercuts exporters outside of China.
Davos: Jacob Zuma Promotes World Cup at ForumSouth African President Jacob Zuma goes on a public relations blitz at the Davos economic forum to promote the World Cup in South Africa. WSJ reporter Roman Kessler has more. The exchange rate is part of China's stimulus package, he said, in a panel discussion on the global economic outlook.
"If the globe is ready to do the exit strategy, China is ready," he said. "A lot of global coordination is required."
This year's gathering of around 2,500 corporate CEOs, world leaders, regulators and other elite movers and shakers was marked by a sense of relief that a catastrophic global depression had been avoided, with much credit given to the extraordinary monetary and fiscal stimulus provided by national governments and central banks in the face of the downturn.
"If we exit too late, public debt will be higher," International Monetary Fund Managing Director Dominique Strauss-Kahn said, in the same panel discussion. "But if we exit too early, there is the risk of a double-dip recession."
Strauss-Kahn said a double dip would be the more dangerous outcome.
"In that case, I don't know what we can do because we have used all of the tools. The probability (of a double dip) is low, but the risk is high."
Signs of global recovery are encouraging, but much of the growth is attributable to the stimulus measures implemented around the world rather than to private-sector activity, he said.
China's decision to rapidly roll out a massive $586 billion stimulus program, equal to around 7% of gross domestic product, in the midst of the financial crisis is widely credited with helping to alleviate the global downturn.
China's economy grew at a faster-than-expected 8.7% pace in 2009.
Chinese policymakers remain focused on a long-term goal of rebalancing China's growth away from exports toward more domestic consumption, Zhu said.
"We understand the U.S. consumer is gone," he said, noting a 16% drop in Chinese exports. "We don't think they'll be back."
Global imbalances were seen as an ingredient in the crisis, with high-consuming, debt-happy nations like the United States snapping up products from export-hungry nations like China.
Zhu said China is shooting for growth of 8% to 9% this year.
The IMF's longstanding advice is to not be too hasty. Governments should continue to provide stimulus already in the pipeline, but with an eye toward dealing with deficits -- a process that will take years, he said.
(20min delay)