Chinese economy would overheat if the issue of excess liquidity
could not be solved substantially, a senior Chinese official said
on Wednesday.
Speaking on the first day of the International Finance Forum in
Beijing, Cheng Siwei, vice chairman of the Standing Committee of
the National People's Congress (NPC), said the excess liquidity
currently remains a major issue in the Chinese economy, calling for
effective measures to deal with it and prevent it from causing the
economy to overheat.
"Capital coming from bank deposits, forex reserves and hot money
from overseas have raised the consumer prices and pushed up both
the property market and the stock market at the same time, which
traditionally move in opposite directions," said Cheng, who is also
a leading economist.
"China is taking monetary measures to curb excess liquidity,"
said Cheng, but he admitted that the policies of raising the
reserve requirement ratio, interest rate and the securities stamp
tax have not brought about "satisfactory results".
China should further expand the capacity of the stock market by
encouraging companies listed overseas to go public in the domestic
market, as well as accelerating the listing of profitable domestic
companies, said Cheng.
China has brought back three of its state-owned giants, China
Construction Bank, China Shenhua and PetroChina, to list on the
Shanghai Stock Exchange in recent weeks.
Cheng also advised the government to diversify its forex
reserves and gradually release more forex from national reserves to
domestic companies and individuals.
(Xinhua News Agency November 8, 2007)
