China needs to adjust policy to deal with inflationary pressures, ADB's recent report

Source: Internet
Author: User
Keywords China exchange rate inflation China
Tags asset continue control controlled controlling cost credit development
MANILA, January 19 (Xinhua) The Asian Development Bank, which is headquartered in the Philippines, recently published a report pointing to the need for China to implement three major policy adjustments in response to inflationary pressures and overcapacity. The ADB reported that first, China should adjust the current loose monetary policy adjustment time should not be late to focus on the control of new credit and raise the cost of capital.  The report says Chinese policymakers have used administrative measures to prevent asset bubbles from controlling excess liquidity, but the money supply needs to be further controlled or inflation expectations will continue to rise rapidly. The problems in the running of the economy are worsening further.  Second, the current renminbi appreciation pressure on the stability of the RMB exchange rate is important, but with the dollar real ″ peg ″ advantage of the exchange rate policy is gradually narrowing the exchange rate back to the July 2007 to 2008 years of gradual appreciation of the track seems more appropriate. Third, China should deepen economic structural adjustment with the core of expanding domestic demand to get rid of the excessive dependence of economic growth on foreign trade and investment. The structural adjustment should emphasize two aspects, one is to improve the treatment of rural migrant workers the second is to improve the state-owned enterprises to use capital costs.
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