http://money.cnn.com/

Forget the Fed. Watch China instead12:59pm: Moves by China's central bank to tighten credit will be more of a drag on U.S. growth than any talk of the Fed's exit strategy. More

China's objective last year was to grow it's economy at a rate of 8% to 9% and it's probably the same target this year , by acting early in the year to control overheating of the economy it will be able to keep inflation under control while keeping room to readjust it's lending policy either way as the year unwinds .

This proactive policy is also sending a strong signal to the markets that it intends to refrain buble in the making in the real estate and equity markets at home while protecting the value of it's holdings in US dollar by strenghtening it's value . Once they will believe they have achieved those goals they will be ready to loosen up their lending policy and readjust the yuan probably sometimes around the third Q or early in the fouth . This in turn should give a boost to European and North American markets as well , at a time where CB's will be looking to start raising their rates .

China's economic policy is not only the main driver of world growth but also dictating economic policies elsewhere by inducing the main factors and the timing affecting it. It may not seem all that clear but through the blur of this crisis it's a pattern that seems to take form .

China's broader policies regarding it's national interest be it towards Taiwan, Tibet, or Iran or in dealing in matters of export restriction with the US and Europe is also having a strong effect on world markets .

But it's most lethal tool that could make or brake a king is the policy it will adapt towards US bonds , it's a double edge sword that could impact every players involved and used as a last resorte to dictate the pace and direction of world economic policies .

As a last comment regarding China i would say that before it revalues it's currency i would'nt be surprise if they were to do like India did late last year and buy a huge amount of gold from the IMF maybe sometime in september or october .

Tec