Economic Policy News
- Nation to take more tightening steps
Date: 20-Dec-2006 Sources: (Shenzhen Daily)
CHINA is likely to adopt further measures to curb excess liquidity and put its economy on a more sustainable footing next year, government economists said in remarks published yesterday.
The authorities would use a variety of tools, including fiscal and monetary policy, to cool a liquidity-fuelled boom in fixed-asset investment growth, said Fan Jianping, head of the forecasting unit of the State Information Center, a think tank under the National Development and Reform Commission (NDRC).
The heated property sector will remain a key focus of the government's tightening campaign as prices in many cities keep rising, he said in the official China Securities Journal.
The government needs to concentrate on implementing existing measures to cool the real estate market, Fan said. Wang Xiaoguang, a department head of the Macroeconomic Research Institute, another think tank under the country's top economic planner, said the government can afford to raise interest rates further next year.
Wang noted a recent slowdown in investment growth and forecast that it will continue to stabilize next year. Still, the country needs to be alert for a possible rebound, he said.
China has raised benchmark interest rates twice this year and on three occasions has increased the proportion of deposits that banks must hold in reserve with the central bank.
In a comment, the paper said another increase in required reserves is likely next quarter to absorb liquidity flooding back into the banking system after February's Lunar New Year holiday.
People's Bank of China Vice Governor Wu Xiaoling said yesterday the central bank will continue to use commercial banks' reserve requirement ratio and open market operations in its fight against excess liquidity in the banking system.
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