Don't expect any dramatic rate hikes from China: StanChart

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Q: What implications does this have for the commodity and the currency markets?

A: This is something that the commodity markets and the currency markets should take onboard. It's not something, which means that China is going to move very rapidly in the short-term. We are still expecting quite strong loan growth this year. We are expecting a high GDP growth of about 10% for the full year. China definitely wants to continue to grow but it doesn't want to be getting back to very frothy rates that we saw back in 2007 of about 14%.

Definitely they are going to reign in inflation. They are going to keep an eye on that - they don't probably want to see going much above 4%. That is going to be one of the factors they keep an eye on. I think this is just a case of telling everybody at the beginning of the year, don't get too carried away.

Q: So you don't see any considerable impact on commodity and currency markets because some of the commodity markets have run up quite a bit?

A: From the commodity point of view, we still strong demand. If we see overall growth at China at something like 10% that means it's a lot more stuff that is going to get consumed in China. We are going to have a bigger economy going forward there. There maybe certain commodities that may suffer. We saw copper prices fall yesterday but actually this is a very small move. It's really more of a signal not that we are going to see a dramatic tightening and trying to slow the economy. It's just China tell the people not to get too carried away.

When it comes to the currency point of view again the markets maybe building a little bit too much for appreciation of the Yuan. We are not expecting to see anything until the second half of the year and even then probably very minor move as they de-peg US Dollar and maybe later appreciate 2-3%.

It is not going to knock the recovery in the export market on ahead by having a dramatic move. There are still a lot of marginally profitable exporters out there who are just starting to get back on their feet. We are expecting to see export growth come back in. That should be released on Monday or Tuesday. That will be the first time for while but that is coming off a low base and it's still relatively fragile and we are not expecting the Chinese to actually derail that recovery.