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From Christine Gaylican, Opalesque Asia:

As China played “hero” during the crucial times of the global financial meltdown, investors and managers are now wary if it may turned “villain” if China’s state government will not immediately pull back and re-assess its fundamentals and policies.

Investment managers and experts have raised concerns that since the Chinese Renminbi stayed flat in spite of pressures from the International Monetary Fund and the United States government, this may not bode well for asset prices in the medium term.

In its latest global economic year-ender report, “The Shape of the Recovery in 2010 (Source),” Deloitte Research pointed out that a potential peril for China is eroding asset prices especially that of real estate if the timing to lift its fiscal stimulus package worth US$1.5tln is not right.

Stimuli anxiety

Dr. Ira Kalish of Deloitte Research said the problem with China’s money-fuelled increases in equity and property prices is that when the state central bank starts to tighten monetary policy, it could result in a sharp drop in asset prices.

“This in turn, would have a negative impact on consumer spending and on the performance of bank loans,” Kalish said.

He noted that the issue of non-performing loans (NPLs) now looms as massive increase i......................

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