Excess Liquidity Should Focus on Internal Economic Balance
- By Orietta Qi
- Published 01/20/2012
- Business
- Unrated
Orietta Qi
I am a professional editor from China Products, and my work is to promote a free online trade platform. http://www.himfr.com/ contain a great deal of information about copper range hoods,automatic rice cooker,wicker picnic basket, welcome to visit!
View all articles by Orietta Qi
United States perspective, slow economic recovery, unemployment is high, productivity gap larger case, the implementation of a very unorthodox policy of quantitative easing Yi Jing is the only one of the options the Federal Reserve. Judging from the euro zone, the United States after the restart the quantitative easing policy, monetary policy, the European Central Bank increased the complexity of the operation, exit strategies for the implementation of the euro area is expected to be postponed.
Although China and the United States are facing the problem of excess liquidity, but the stage of development of the two countries and the volatility of the economic cycle stages are quite different, therefore, China's response to the current excess liquidity, should focus on maintaining the internal economy balance.
1. From a development perspective, China's current high savings rate and abundant liquidity conditions, the total investment in future growth may have to take a more tolerant attitude. If future crisis, the need to pursue the trade balance, increasing domestic demand, the investment rate may be the high point in the history of the further improvement of reduced external demand, savings and investment needs to absorb more than by the outflow. In the current stage of development, the emphasis is focused regulatory mechanisms, the total amount of investment, the key is balance between investment and savings.
2. Foreign and domestic excess liquidity make money cheap, easy high-growth investment. Since 2010, China's economy has increased strongly in 2011 in the "Eleventh Five-Year" and "Twelve Five," the convergence of, and then add the superposition of a political cycle, then if
the local government GDP in the current pattern of behavior-oriented, financial expenditure patterns significant adjustment difficult circumstances, should focus on the economy shifted from a relatively fast possibility of overheating.
3. With the United States to take the quantitative easing policy, capital flows to emerging markets represented by China is inevitable, to curb hot money inflow will be the inevitable trend. And, as a symmetry control measures, China will strengthen the capital inflows, or at the same time, and gradually relax control on capital outflows, financial institutions and residents to encourage increased foreign investment, while actively promoting the internationalization of the RMB.
4. With the market and institutional reforms, the current market transactions not yet entered a large part of the products and services will gradually become a tradable commodity, part of the underlying commodity that needs to be absorbed by money, money supply and low inflation rate increase will coexist. Moreover, China's export growth rate will inevitably fall through an appropriate, will be non-tradeable goods into traded goods, domestic non-traded goods will absorb more and more money, while some of the pressure of RMB appreciation factor prices to increase by to achieve each unit of tradable goods the demand for money will increase, which will be reflected in the CPI.
5. Currency composition from the point of view, although the total amount of M2 in China is already very large, but compared with the United States and other developed countries, China, M3, M4 of the total still room for improvement. For some time, China has maintained a steady money supply growth in the case of financial markets through the development and diversification of financial products, M2 growth will be converted to M3, M4 growth.
Although China and the United States are facing the problem of excess liquidity, but the stage of development of the two countries and the volatility of the economic cycle stages are quite different, therefore, China's response to the current excess liquidity, should focus on maintaining the internal economy balance.
1. From a development perspective, China's current high savings rate and abundant liquidity conditions, the total investment in future growth may have to take a more tolerant attitude. If future crisis, the need to pursue the trade balance, increasing domestic demand, the investment rate may be the high point in the history of the further improvement of reduced external demand, savings and investment needs to absorb more than by the outflow. In the current stage of development, the emphasis is focused regulatory mechanisms, the total amount of investment, the key is balance between investment and savings.
2. Foreign and domestic excess liquidity make money cheap, easy high-growth investment. Since 2010, China's economy has increased strongly in 2011 in the "Eleventh Five-Year" and "Twelve Five," the convergence of, and then add the superposition of a political cycle, then if
3. With the United States to take the quantitative easing policy, capital flows to emerging markets represented by China is inevitable, to curb hot money inflow will be the inevitable trend. And, as a symmetry control measures, China will strengthen the capital inflows, or at the same time, and gradually relax control on capital outflows, financial institutions and residents to encourage increased foreign investment, while actively promoting the internationalization of the RMB.
4. With the market and institutional reforms, the current market transactions not yet entered a large part of the products and services will gradually become a tradable commodity, part of the underlying commodity that needs to be absorbed by money, money supply and low inflation rate increase will coexist. Moreover, China's export growth rate will inevitably fall through an appropriate, will be non-tradeable goods into traded goods, domestic non-traded goods will absorb more and more money, while some of the pressure of RMB appreciation factor prices to increase by to achieve each unit of tradable goods the demand for money will increase, which will be reflected in the CPI.
5. Currency composition from the point of view, although the total amount of M2 in China is already very large, but compared with the United States and other developed countries, China, M3, M4 of the total still room for improvement. For some time, China has maintained a steady money supply growth in the case of financial markets through the development and diversification of financial products, M2 growth will be converted to M3, M4 growth.
| Do you like this article? Great! Now is the time to do a Re-Tweet and tell everyone on Twitter. Are you not in Twitter? Follow Us! | ||
 |
