Wang Tao: Strong export and real estate construction will cause policy tightening

"The strength of the October trade and real estate construction shows that the engine of growth continues to remain strong, with further hedging and interest-rate hikes coming in the next two months," said Liao Zongkui, chief economist at UBS Securities.　　Imports and exports in October respectively grew 22.9% (Year-on-year) and 25.3% (year-on-year), the trade surplus of 27 billion U.S. dollars, the trade surplus has reached 147.7 billion U.S. dollars since this year, close to the government set a target of 180 billion dollars a year. October the country 70 large and medium cities commercial housing sales area actually grew 16% year-on-year. It seems that sales in other parts of the first-tier city have been largely unaffected, and sales have shrunk somewhat in October relative to September.　　But Ms. Wang said October sales were the second highest in history, after September, excluding seasonal factors. In the case of "twin engines" – exports and real estate construction – the government must focus more on controlling inflation. The People's bank has raised the reserve requirement ratio by 50 basis points to recover some of the liquidity (about 300 billion yuan). At the end of September, Wang said, the bank's excess reserve ratio was 1.4% per cent, but the data could have risen in October, fuelled by a flood of continued inflows of foreign exchange funds.　　Central banks are expected to raise interest rates again around December. In addition to hedging and interest rate hikes, Wang pointed out that there should be more regulation in two areas (1) tightening the 2011 lending target by 67 trillion yuan (currently expected to be 7-7 5 trillion yuan) and (2) accelerating the pace of renminbi appreciation to help combat imported inflation.　　Either raising interest rates or appreciating the renminbi may need to be supplemented by tighter capital controls in order to keep the excess inflows from the Fed's two-time QE at the door. (Stock market Weekly feeds)