Report of the People's University: Price-controlled, stable recovery, macro core

Securities Times reporter Zhou Rongxiang, the Chinese People's University of Economics, China's Macroeconomic analysis and forecast report of 2010-2011, said, "Price control, planning, stable recovery" will become the core of macroeconomic regulation in the 2011.　　The report suggested that the central bank should raise the reserve requirement ratio of 150-200 basis points by 2011, while moderately raising interest rates, but should not be used frequently.　　The report noted that in 2011, in order to prevent inflation, the government will carry out liquidity recovery, but also will continue to strengthen the property control and the external environment deterioration and other factors, will dominate the 2011 Chinese economy's downward force. The report stressed that the continued and further increase in real estate policy will make real estate sales, investment and price substantial adjustment, real estate short-term "soft landing" may induce China's macro-economic downward force strengthening.　　The report predicts that prices will fall by nearly 20% next year.　　But the report also pointed out that 2011 was the start of the "Twelve-Five" year, the "Strategic emerging Industry revitalization Plan", "Regional Development Plan", "People's Livelihood Project", "Income multiplication plan" and the new consumption stimulus policy which are bred in the new plan will bring strong macro-stimulating effect, effectively hedging the downward pressure. In particular, the report predicts GDP growth will fall by quarter in 2010, with growth in the fourth quarter falling 2.9% per cent from the first quarter to 9%.　　This downward trend will continue into the second quarter of 2011, the third quarter of 2011, the economy will rebound, the annual estimated GDP growth rate will reach 9.6%, showing a steady growth trend. In addition, investment growth will fall further in 2011, with a growth rate of only 22.5% per cent a year. But under the action of all kinds of stimulative policy, income level adjustment and other social factors, consumption will maintain the high growth rate, the nominal growth will reach 17.8%, and the contribution ratio will exceed the investment again, China has begun to enter the "consumption-driven era".　　On the foreign trade front, total trade growth will decline next year, just 22.4%, down 10% from 2010. In terms of recycling, the report notes that credit should remain at 70,000 to 7.5 trillion in 2011, and that M1 and M2 growth will fall further, expected to be 16.9% and 17%.　　This requires the central bank to raise the reserve requirement ratio of about 150-200 basis points, while a modest rate hike.　　The report stressed that, in view of the increased pressure on the renminbi in 2010, the second round of quantitative easing in the U.S. monetary policy shocks and international capital, and other factors, in order to avoid the conflict between the price-type monetary policy instruments and exchange rate policy, next year, the rate hike should not be frequently used, and not The report suggests that central banks should rely more on reserve ratios, open market operations, and strengthen macro-prudential regulation and standards to recycle liquidity.　　Strengthening macro-prudential supervision as one of the methods should be fully launched in China. In the direction of monetary policy, vegetable price fall, expected moderate correction, etc., the report predicts that 2011 will effectively curb the trend of price rises and the spread of economic bubbles, but because liquidity is difficult to adjust in the short term, liquidity spillover in the property market, various costs rise and commodity prices continue to move higher, 2011-year price pressure remains.　　As a result, the report predicts a 2011 CPI of 3%. To tie in with the launch of the "Twelve-Five plan", the report also suggests that fiscal policy should maintain a positive overall principle while monetary policy is shrinking in total. 2011 fiscal deficit can be expanded according to needs, in the expansion of local government debt rights, based on the focus on the size of local government debt, the proposed scale of 400 billion yuan.