China’s Economic Stimulus Policies Might Quit In Mid
Economic stimulus policies in China in mid-2010 may quit
China’s economy has been able to quickly recover in a short time, a huge economic stimulus is the most valuable indeed. However, the objective of economic operation has its own laws, in the economic downturn forced to external stimuli, will certainly bring some more or less side-effects: the dependence of economic growth, increase investment, economic, lack of endogenous growth momentum … … based on these issues considerations, when to pull out of economic stimulus policies, is causing the market’s attention.
Three factors induced stimulus needed to maintain
General, has confirmed that its economic recovery after 3 consecutive months, we can consider how to withdraw from the economic stimulus. Taking into account the current round of stimulus is a once Financial Timely launch of the next crisis, in the face of the environment is unprecedented, its exit point should be relatively prolonged, such as 2 to 3 quarters. Even so, a 3-quarter single-quarter GDP growth rate in China was 6.1%, 7.9% and 8.9%, set the trend of economic recovery, but also the time has come to quit, but I believe that the current stimulus, can not quit, the following main reasons :
From a global perspective, the incentives are not yet time to quit. Although the global economic and financial situation gradually improved, but recovery is still uneven, is still dependent on stimulus policy support, high unemployment is particularly worrying. Although Israel, Australia, Norway and other countries to interest rate policy, India has also raised the statutory liquidity ratio of commercial banks, but the situation in these countries varied little influence on China, the most important is that Europe and the United States and other major economies do anything.
From their point of view, the basis of our economic recovery is not stable, not consolidation, unbalanced. Although the first of China’s economic recovery, driven largely by government investment, from the physical level, private investment and social spending have not been completely driven up.
From out of the basic conditions, the current bottleneck in addition to the existence of local constraints, most of the industrial and consumer goods, a state of oversupply, investment, consumption and export demand led to a comprehensive economic entity the possibility of high inflation not significant, and inflation is not a real threat in our country, most are only potential risks, which need not overly worry about.
2010 may quit in mid- Although the stimulus is still not fully out, but if we continue to be implemented, will be facing a “dilemma” the dilemma: on the one hand, out of bad economic structure and further concerns about inflationary pressures, the Government is inclined to reduce the stimulus intensity; while on the other hand, the inherent vitality of economic loss and “preserve jobs,” the pressure, but also makes the government not to relax somewhat in the stimulus intensity.
Especially in fixed asset investment, the “dilemma” is far more dramatic: As an active fiscal policy and loose monetary policy to stimulate appropriate under the general construction of a large number of long-term infrastructure projects, has a certain continuity the need to constantly follow up the follow-up funding.
Therefore, future financial and monetary twisting on the scale of the need to accurately place, too much may lead to excessive investment, which induces inflation; too little will result in some projects as works or uncompleted projects unfinished, resulting in waste of resources. When will the exit
but how? This will mainly depend on future domestic economic growth and inflation expectations and inflation changes and the world’s major economies, the economic situation and easing out of time to several major factors, most of which is a barometer of changes in inflation, which is the trend of CPI . Comprehensive judgments, I believe that the end of the second quarter of 2010, the time may be out of the window:
11 held 7 G20 Finance Ministers and Central Bank Governors meeting that out of the current stimulus is still too early, still maintained. But it also left a hand: the economy has fully recovered, the countries should Cooperation Coordinated exit from unconventional macroeconomic and financial support policies. The EU even set a schedule: as long as the European Commission on December 3 on the economic forecast showing that the recovery has been strong, the EU member states no later than 2011, starting from fiscal consolidation to reduce the budget deficit.
Thus, even though global economic stimulus policies to maintain, but not too far away from the exit. From the current trend of economic development perspective, the fourth quarter of this year, global economic stability and recovery phase, the first quarter of 2010 continued to rebound in the second quarter may determine whether the economy fully recover.
Situation from their own development, our country’s economic growth to accelerate recovery of the trend established in the fourth quarter economic growth rate over 9% did not issue an annual economic growth at between 8.2% ~ 8.5% more likely to . Next year will maintain rapid growth in domestic investment and consumption will continue to maintain a rapid growth in exports will be improved, economic growth will further accelerate the annual growth rate is expected to exceed 9%.
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