An article about my country in the international press//week 10//Text Based Skills

China changes rules on market bubble fears

I read that article from "The Telegraph UK". If you were an economist or a businessman, you would notice the Asia stocks market is a bit of overheating, especially in China. Along with economy increasing in China, a lot of investment trusts are putting their money into stocks exchange market from overseas. As a result, Hong Kong stocks market (H-shares) reached the record highs again on 14^th May 2007, up 5.36pc. At the same time, Shanghai stocks exchange index has hit the 4,000 marks—the highest record in the past of 24 months, just three weeks after passing 3,000 marks. Dr. Frank Gong, head of China research and strategy, and chief economist at JPMorgan, said:" With excess liquidity on such a massive scale, there is the risk of an asset bubble in China arising eventually…" and so far, more than 10 million Chinese small investors have open their broking accounts. The government warns that it is a bubble waiting to burst. So, Chinese government change rules to cool off the overheated market.

I have chosen this article because the economy of New Zealand is the similar situation with China. The pressure of inflation is going up, and the NZ dollar is near 20pc overvalued, and the property market is overheated as well. So, I really want to know what our government will do besides increase interest of OCR(official cash rate)?