China faces the threats of faltering demand for exports, rising wages and the risk of bad loans from record lending after surpassing Japan as the world’s second- biggest economy last quarter.
Inflows into bond funds in the US doubled in July compared to June as investors pulled money out of equity-based mutual funds, according to investment research firm Morningstar.
As the value of the Japanese yen hit a 15-year high against the US dollar, the country’s policymakers stepped up their rhetoric over the steep rise in the currency.
Hedge fund investors developed a central focus on Chinese foreign exchange policy in the second quarter of 2010, as the Chinese central bank took steps toward increased flexibility of its currency policy, according to Hedge Fund Research (HFR).
Chinese Premier Wen Jiabao has reassured foreign investors of the stability of the country’s investment climate, countering fears that China’s economic environment is worsening.

