China-watchers are taking for granted an early interest rate hike, with one probably coming in the next few days. So speculation has switched to another crucial parameter of monetary policy - the 2011 loan growth target.
Steven Sun of HSBC expects the number to emerge during this week’s national economic working conference of top economic policymakers. A big cut from this year’s Rmb7,500bn ($1,300bn) of new loans is likely. If the inflation hawks prevail, the number could be as low as Rmb6,000bn. If the pro-growth camp wins, it will be nearer Rmb7,000bn.
Sun says in a note on Tuesday that the decision really matters to the economy and to the corporate profits outlook. He writes:
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