China’s chief banking regulator has said the US Federal Reserve’s weak monetary policy is fueling “speculative investments in stock and property markets” and endangering the global economic recovery, the Financial Times reported. Liu Mingkang believes the combination of a weak dollar and the Fed’s low interest rates are facilitating a “huge carry trade” that is distorting global asset prices. China, which is the largest US creditor by virtue of its massive Treasury bond holdings, has previously focused its criticism on US fiscal policy, arguing that Washington’s rising debt burden is undermining the dollar. Liu’s remarks come at time when China’s own monetary policy is also attracting scrutiny, following the massive credit expansion seen so far this year. Qin Xiao, chairman of China Merchants Bank, said last week that Beijing urgently needed to tighten monetary policy to avoid stock and property market bubbles.
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