Another Shot Across Asia's Bow

A shocking announcement by China's Premier Wen Jiabao that his country's growth was "unstable and environmentally unsustainable" sent markets in Asia into the red Friday, reversing earlier gains. Since the beginning of the year, China's premier has become increasingly critical in public of the country's economy. But Friday's comments included the most severe criticism yet.

"China's investment growth is too high, lending growth too fast, liquidity excessive, and trade and international payments very imbalanced," Wen said, Bloomberg reports. "The biggest problem in China's economy is that the growth is unstable, imbalanced, uncoordinated and unsustainable."

The timing of the announcement is reminiscent of Wen's Chinese New Year holiday declaration at the end of February to crack down on corruption and fraud on local stock exchanges. Many say that was responsible for the massive 8.8% declines in the Shanghai stock exchange on Feb. 27, as fears brewed over the holidays while the markets were shut.

Asian markets closed down tamely Friday considering the severity of Wen's comments, prompting fears that the real impact will be felt early next week. As was the case in February, investors will have two days to mull Wen's latest announcement, which many see as compounding uncertainty over the valuation of China's markets.

The Hang Seng ended the day down just 0.08% at 18,953.50, the Nikkei shed just 0.69% to end the week at 16,744.15 and the Shanghai Composite Index was down 0.72% to 2930.48. The dip into the red followed gains in intraday trading, where the Hang Seng reached 19,130.10, the Nikkei capped 16,939.43 and the Shanghai Composite gained slightly to 2979.71 before sliding back.