China

China hiked up their benchmark interest rates to 5.85 per cent last week, to rein in growth and inflation. Foreign Banks applauded Chinese interest rate hike as emblematic of China’s broader effort to allow market forces to play a larger role in the economy. However there is still that Chinese RMB to US dollar peg that severely constrains their ability do conduct monetary policy. The Chinese may need to release the US dollar peg, allowing the Yuan to appreciate at a faster pace to prevent an influx of speculative capital.

Capitalist Pirates in Shanghai China - think carefully before launching a production factory campaign in China: Terry Petty and his Chinese representatives thought the terms were ridiculous. So starts the capitalist pirate story...

An American investor, Petty had forged a venture with the son of a local Communist Party official to open a machine shop here in the industrial outskirts of China's most cosmopolitan city.

But after two years of internal disputes, the venture had disintegrated. The local man was urging Petty's people to sign a contract selling him their stake and surrendering full control. They would not go along.

But even as the negotiations proceeded on this September afternoon, the local partner was mobilising to seize the factory: a team of 15 men - many with shaved heads and dressed in black - arrived at the plant, according to managers. They told the workers that they were now in charge and ordered production to cease.

This year, China will outstrip the UK to become the world's fourth largest economy. A new economic census, which has probed the murky depths of China's grey economy, with its cash-only back-alley businesses, decided that the Chinese economy is actually 20 per cent bigger than the official figures suggest.