China should keep its monetary policy tight due to the imbalance between its international payments and surging global prices, Wednesday's Shanghai Securities News reported, citing Xia Bin, a senior economist with the Development Research Center, a think tank under the State Council.

Xia said that the government should seek a balance between securing economic growth and curbing price hikes.

In order to achieve this year's goal of macroeconomic control, Xia suggested four policies:

--- Tighten monetary policy. Xia noted that in order to mop up the ample liquidity in the financial system, the government should keep monetary policy tight and pay attention to the nominal and real value of monetary loan increases. Xia also suggested that the government push forward the launch of the Growth Enterprise Market and promote the development of private equity funds to facilitate the financing of small and medium-sized enterprises.

--- Stabilize exchange rate. Xia called for faster yuan appreciation during a short period before keeping the yuan relatively stable in order to break current appreciation expectations in the market. The government should also consider strengthening capital control in the near future, Xia said.

--- Regulate prices. Xia suggested the government further adjust its resource prices in order to sustain China's economic growth.

--- Go easy on the fiscal policy. Although the Chinese economy has faced downward pressure this year, the country has done well in terms of fiscal revenue, indicating that the government still has plenty of room for future fiscal policy moves.

While commodity prices remain on the rise, the government should provide more to support the economy, such as providing subsidies to low-income citizens and raising the income tax threshold, Xia noted.

For more details, please read the full story in Chinese

(http://paper.cnstock.com/paper_new/html/2008-07/16/content_64150831.htm).

(China.org.cn by Yan Pei, July 16, 2008)