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China Will Adjust Its Monetary Policy Next Year.

2010/11/4 8:52:00 28

At home and abroad this year

economic situation

Although it is extraordinarily complex, it is fortunate that China's economy has not yet experienced major setbacks.

Now the time has come into November, and the central economic work conference will be held soon. Next year, the keynote of economic policy needs to be established at the meeting.

For this reason, the central government is carrying out a series of research and discussion.

As an important tool of economic regulation, the trend of monetary policy is particularly concerned.

Some people also expressed their views on this.

Jia Kang, director of the Finance Ministry of finance, 1, said that China's monetary policy has been basically clear and steady, and now stands on the first step of raising interest rates.

He believes that the next step in China's fiscal and monetary policies is to consider "a loose and tight" mix.

On the 2 day, Li Daokui, member of the monetary policy committee of the central bank, said that when the economy was stable and stable growth, we could consider turning to a prudent or even prudent monetary policy.

Because of the huge scale of liquidity, China's economy has the risk of forming asset bubbles. The central bank can consider tightening monetary policy to resist such risks.

He pointed out that

monetary policy

We should focus on asset prices and control asset price fluctuations if necessary.

In the above remarks, both Jia Kang and Li Daokui suggest tightening monetary policy in the future.

Of course, the final direction of China's monetary policy must be based on the basic situation of China's economy and reference to the international economic environment.

Internationally, the central banks of major economies maintain very low interest rates and loose monetary policy.

Japan, which was trapped in the yen appreciation and deflation, first started the second round of quantitative easing, and announced the 5 trillion yen asset purchase plan.

Next, the high-profile fed meeting will end on the 3 th, and now almost everyone in the market thinks the Fed will announce a huge asset purchase plan after the meeting is over.

Market participants expect an average of US $457 billion from the Federal Reserve's asset purchase plan.

In Britain, the Bank of England is also ready to implement quantitative easing in the face of the enormous pressure of fiscal deficit on economic growth.

The European Central Bank, while claiming that it has not yet considered quantitative easing, has not stopped buying eurozone government bonds in the open market.

Although the major economies have achieved a high degree of consistency in loose monetary policy, this does not mean that China can take a simple follow - up strategy.

At present, there are two major problems in the economic operation of developed countries: first,

deflation

Threats.

Secondly, heavy public debt.

In China, the opposite is true: inflationary pressures are increasingly heavy, CPI is rising steadily, property prices remain high, and the government's financial position is good, and its debt to GDP ratio is relatively low.

In addition, in developing China, there is indeed a lack of infrastructure construction, which has certain fiscal stimulus space.

As a result, the combination of "tight finance and wide currency" adopted by countries such as Europe and the United States can completely turn over to China and implement "wide fiscal and tight currency" so that we can have the right remedy.

Although tightening monetary policy can restrain inflation and asset price bubbles, it will inevitably affect economic growth to a certain extent.

Can China's economy sustain the impact? The 1 China's purchasing managers' index (PMI) shows that in October, PMI was 54.7%, up 0.9 percentage points from last month, for third consecutive months of recovery, and the situation of economic stabilization is further obvious.

In addition, the "12th Five-Year plan" has established the main keynote of changing the mode of economic development, and the moderate decline in economic growth is entirely acceptable.

On the other hand, when inflation peaked, the parties were still in dispute.

In other words, even if the CPI increase can reach its peak in the past two months, it will be difficult to return to below 3% in the short term.

Thus, in the trade-off between growth and inflation, inflation will be considered more.

As for tightening up the specific operation of monetary policy, the central bank should take both price and quantitative tools simultaneously.

In terms of quantity, the deposit reserve ratio has been at a high level and there is little room for further increase.

In terms of price type, the central bank in October started raising interest rates.

Although the increase in interest rates may attract the influx of international hot money in the peripheral markets, considering that the current capital account is still under strict control, arbitrage funds are inconvenient. The main purpose of the hot money is to chase after the gains from the rise in asset prices, and the increase in interest rates can just inhibit the rise in the price of assets.

In this way, the scale of the inflow of hot money can be reduced, and in turn, to a certain extent, the pressure of RMB appreciation will be alleviated, so as to take into account the external objectives of the central bank.

Ampang believes that the continued low interest environment in the peripheral market has brought many problems to China's choice of monetary policy. However, from the fundamentals of China's economy, the trend of easing monetary policy from easy to neutral will continue. Next year's monetary policy will still be on the road of tightening.