China: Low U.S. Rates Are Problem

BEIJING -- China's top bank regulator said Sunday the weakening U.S. dollar and low interest rates are spurring speculation in stocks and property, distorting global asset prices and threatening the global economic recovery.

The situation poses an "insurmountable risk to the recovery of the world economy," Liu Mingkang, chairman of the China Banking Regulatory Commission, warned just hours before President Barack Obama was due to arrive in China.

Speaking at a conference in Beijing, Liu said the declining U.S. dollar and reassurances by officials that interest rates will remain low were encouraging a "massive" U.S. dollar carry trade -- the practice of borrowing money at low rates in one currency to invest in assets in another currency that offer a higher return. ...