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| On the first quarter 2007, report shows that China economy has grown 11.1%. This number is much higher than many people expected. This overheating can be a problem to the global economy because it is now a major player in the world economy. China growth will cause inflation, which will be followed by the increase of interest rate. In order to handle the inflation, the central bank will be most likely to increase the interest rate, which will absorb money. The increase of interest rate will cause problem in the banking system, due to the high credit rate. If the banking system there is having trouble, it would spread to other countries, causing major damage to the global economy. |
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