China Development and Reform Commission Minister Ma Kai said
over the weekend that the country will adopt a tight monetary
policy while continuing a prudent fiscal policy.
Ma made the remarks at the first high-profile economic dialog
between China and Japan held Saturday in Beijing.
Observers here said over the past few years, China had adhered
to a moderately tight monetary policy. This time, Ma, head of the
country's top economic planning agency, took off the word
"moderately".
Also at the Sino-Japanese economic dialog, Finance Minister Xie
Xuren said China would make use of various monetary instruments to
intensify credit control.
China's central bank has this year raised the
reserve-requirement ratio for commercial banks nine times and
interest rates five times.
Observers reckoned a sixth rate hike for the year was around the
corner.
China has paid growing attention to the mounting inflationary
pressure after the country's consumer price index (CPI) recorded a
10-year-high rise of 6.5 percent in October.
In addition, the Political Bureau of the Central Committee of
the Communist Party of China convened a meeting last week and said
next year's top macroeconomic priorities would be in preventing the
economy from overheating and the current price increases from
evolving into "evident inflation".
The observers believed China would continue to face high
inflationary pressure next year. In international markets, oil
prices would continue their exposure to high volatility and grain
prices would keep rising.
In the domestic market, high food prices would likely give rise
to the price of labor and then the production cost in different
sectors.
Yu Yongding at the research institute of world economy and
politics under the Chinese Academy of Social Sciences said that
four percent was the CPI ceiling that China could tolerate. If the
inflation indicator increased higher it would send a signal to the
central bank that a tight monetary policy was necessary.
Zhuang Jian, chief economist of the Asian Development Bank in
China, said the monetary policy had played an important role in
China's macroeconomic control and it would be indispensable for the
country's future economic regulation.
(Xinhua News Agency December 4, 2007)
