The bank says China has no inflationary pressure and experts question

The World Bank (hereinafter referred to as "the World Bank") yesterday released its latest China quarterly report, which will raise the forecast for China's gross domestic product growth by 0.4% to 8.4% per cent in 2009, the third time this year to raise expectations for China's GDP growth next year.　　The bank also suggested that overcapacity would absorb some of the inflation and that China's economy was "largely free of inflationary pressures" in 2009, so there was no need to tighten macroeconomic policy at this stage.　　However, compared with the bank's "growing optimism", China's policymakers have apparently become increasingly wary of "inflation".　　October 22, the State Council executive meeting set the tone for the fourth quarter of this year's economic work, the first to "manage inflation expectations" as the next few months of macro-control focus.　　To achieve the effect of "managing inflation Expectations", CICC's research report said the central bank would prefer to use the interest-rate tool first, expecting a bigger 1-year yield on the November issue, and a 27-point hike in the first half of next year. In addition to the possibility of using interest-rate instruments, central banks are also upping the use of quantitative tools. In the past October, the central bank ended a 6 consecutive months of net delivery posture, a single month of large net withdrawal of funds of 156 billion yuan, the open market is gradually increasing the strength of the withdrawal.　　At the same time, according to bank insiders, the Central bank's credit window guidance has become increasingly stringent. "This shows that monetary policy is already shrinking in substance," said Xiamingren, a postdoctoral researcher at the Treasury Department. "As early as the end of the two quarter, the central bank has put forward the" inflation expectations have appeared "warning.　　Three months later, inflation expectations have intensified, and the central bank believes that "doing well in managing inflation expectations" is an issue that should now be closely watched. Notably, some of the world's countries have taken the lead in "policy withdrawal" to prevent the side effects of the stimulus. The RBA again raised interest rates by 25 basis points to 3.5% per cent this month, and said it would step back from stimulus measures.　　The central bank of Norway recently raised its benchmark interest rate, while the RBI raised reserve requirements, and the Federal Reserve, Europe and the Bank of England will also "negotiate" two days later this week. In fact, in recent months, Chinese academics have been exploring how monetary policy and fiscal policy can be withdrawn in due course.　　They argue that, despite the current period of overcapacity, policies must be forward-looking because of the effects of liquidity and rising international commodity prices on domestic prices, overcapacity and inflation. Yang Ruilong, dean of the School of Economics at Renmin University, said: "Historically, the difference between monetary growth and GDP growth is more than a certain amount, and will certainly be reflected in inflation over a year or so." At present, China's money supply (M2) growth rate of up to 28%, has exceeded GDP growth of about 20%. But Xiamingren also said, "based on China's economic endogenous growth momentum has not been fully repaired, exogenous growth factors are also very fragile, the extent of our stimulus policy contraction is limited."