The Bank of Japan left interest rates unchanged today, which was in line with expectations. Even though the BoJ believes that the economy is expanding moderately, they added that the pace of growth is slowing due to a drop in housing investments. Fukui also more warned of downside risks, which should have been bearish for the Japanese Yen, but wasn’t. Instead, the Yen rallied because the Chinese government increased interest rates for the sixth time this year. Rising inflation expectations, continual growth, a solid housing and stock market are all reasons that have forced the central bank to take interest rates to a nine year high. At a time when growth in many other countries is slowing, China’s predicament is a source of envy, especially since they grew at an annualized pace of 11.5 percent in the third quarter. In a Thomson Financial report released today, we learned that for the first time ever, China has become a net foreign investor. As of December 19, in 2007, China received $25.1 billion inbound investments and made $30 billion worth of outbound investments. Although the number of outbound deals was only a third of the inbound deals, the size of each of China’s investments was significantly larger.