Tight Monetary Policy Still Needs Continuous Fiscal Policy To Make Structural Adjustment.

In July 17th, the data released by the National Bureau of statistics showed that the economic growth in the first half was 10.4%, down 1.8 percentage points over the same period.

In the two quarter, the economy grew by 10.1% over the previous year, down 0.5 percentage points from the previous quarter, down 2.5 percentage points.

Economic growth has dropped, and Li Xiaochao, spokesman for the National Bureau of statistics, pointed out that "meeting the expectations of macroeconomic regulation and control".

He pointed out at the 17 news conference that the current economic growth rate is falling in structural adjustment.

Although the growth rate of the eastern region has dropped, the growth of the central and western regions is accelerating.

At the same time, although consumer prices rose by 7.1% in June, down from May, Li Xiaochao believes that prices will continue to run at a high level for a long time, so "we must continue to control excessive inflation and prevent inflation".

To this end, the stability and continuity of macroeconomic policies will continue to be further strengthened, and the foresight, pertinence and flexibility of macroeconomic regulation and control will be further enhanced so as to promote sound and rapid development of the national economy.

In July 16th, Li Zuojun, a research fellow of the State Council Development Research Center and Zhang Xiaojing, director of the macroeconomic Office of the Chinese Academy of Social Sciences, accepted an exclusive interview with this newspaper.

Facing inflation risk in the second half

Twenty-first Century: can we define it as "no longer overheating" according to the current economic data and economic performance?

Li Zuojun: whether or not the economy is overheated can not be judged for one or two months. The changes in the underlying factors that affect the CPI can not be seen in the short term.

At present, there are two realistic factors. On the one hand, the rise of international CPI is becoming more and more intense; on the other hand, the factors of domestic cost rise are still maintained, such as land, labor, raw materials, energy, environmental protection and other production factors are maintained at a higher price.

The decline of CPI in front of us plays a direct role in macro regulation.

What we should do now is to continue to observe, and the two is to grasp the intensity of macroeconomic regulation and control.

Zhang Xiaojing: in the second half of this year, it will also face the risk of inflation.

Inflation risks mainly come from three aspects: the international aspect, the world is in an adjustment period, and the price of raw materials market will continue to rise. In the domestic situation, the domestic market reform has led to a certain degree of increase in production costs; the other is the overgrowth of total demand caused by high speed growth in previous years, including excessive investment, market and credit demand, although it has been alleviated, but it still plays a certain role in promoting inflation.

Inflation will not lead to a sharp decline in the economy.

Twenty-first Century: why is it more important to control price growth than to maintain growth?

Li Zuojun: it is very correct to control price growth more important than insurance growth.

The core reason is that since 2001, the economy has been growing at a rate of over 10%.

Excessive tension has brought great pressure to resources and environment.

This is not appropriate.

Now we need to slow down economic growth.

By restraining prices and curbing inflation, we return to the level of potential economic growth.

Although such a slide must pay a price.

Zhang Xiaojing: the biggest risk in the short term is inflation. In the absence of a macroeconomic downturn, inflation should be controlled in the short term.

But in the long run, our top priority is to maintain economic growth. Maybe short-term inflation is inevitable for long-term economic growth.

Twenty-first Century: will inflation control cause the economy to continue to slide, and is there a risk of a sharp downturn in the economy?

Li Zuojun: the general feeling will not be as high as that in the first half of 2008, but it will still maintain a high level of volatility, and at the same time, the possibility of a sharp decline is not great.

Zhang Xiaojing: the risk of economic downfall must exist, but we can not see this trend from the current macroeconomic fundamentals.

Twenty-first Century: from the results of energy conservation and emission reduction in 2007, there are some achievements, but they are still not ideal.

Li Zuojun: fundamentally speaking, it is now from the pition from extensive economy to intensive economy, but this pformation faces many difficulties and challenges, and there is still a certain distance from the goal of the 11th Five-Year plan.

This requires the attention of the whole society and the government's strong measures to promote the goal of the 11th Five-Year plan.

Zhang Xiaojing: judging from the whole, the mode of economic growth can hardly be changed in such a short time.

Of course, we must have made some achievements, but at the moment it should be extensive growth. Changing the mode of growth is a relatively long process, and the key is institutional construction.

Tight monetary policy still needs to continue

Twenty-first Century: does tight monetary policy still need to be sustained?

Do we need to raise interest rates again?

Li Zuojun: whether tight monetary policy continues or not depends on whether inflation has been suppressed.

If inflation is suppressed one day, prices return to normal levels, tight monetary policy can be relaxed.

In tight monetary policy, "raising interest rates" is a "double-edged sword".

On the one hand, the purpose of raising interest rates is to control prices. On the other hand, interest rate hike is bound to bring pressure and negative impact on the development of enterprises.

Therefore, when considering whether or not to raise interest rates again, the policy making departments need to "take the two evils lightly, and take the profits from them", and weigh the pros and cons, and then make decisions.

After all, "raising interest rates" involves many aspects such as economic development, RMB and so on.

Now, the "hot money of foreign investment" has been introduced into China through various channels. The country has taken some measures and achieved some results, but still needs many efforts.

We need to prevent the "fast forward and quick out" situation, especially for some industries with relatively strong liquidity, such as real estate and stock market.

Zhang Xiaojing: at present, we should maintain a tight monetary policy. Although it may affect some small and medium-sized enterprises, if the impact is limited to some individual enterprises and the macro level does not have much impact, it is not necessary to amend monetary policy in the short term.

For some small and medium enterprises affected, we can use other ways, such as small loans, to solve the difficulties.

In addition, I also support increasing the reserve requirement ratio of banks, which can hedge the problem of excess liquidity.

As for raising interest rates, there is no need for further adjustment in the short term. This can also be called "hidden but not issued".

Twenty-first Century: can fiscal policy play an effective role, such as tax cuts?

For example, the textile industry raises the export tax rebate rate?

Li Zuojun: fiscal policy can play an effective role, but it is slower than monetary policy.

We might as well make some adjustments to our prudent fiscal policy, such as becoming more positive.

One way is to reduce taxes and play a role in the distribution of enterprises or residents through taxation.

At the same time, increasing the proportion of expenditure on social public finance (Science, education, culture and health) is second feasible ways.

Zhang Xiaojing: fiscal policy can make some structural adjustments, such as reducing the cost of enterprises through structural tax cuts and so on.

Referring to the export tax rebate, some industries in our country have problems of overcapacity. For some industries, there is no need to implement the export tax rebate policy. Only in this way can we build up the industrial cleaning mechanism of the survival of the fittest.

Twenty-first Century: does the price of refined oil need to be further raised?

What if we continue to push up prices?

How to control the next step?

Li Zuojun: at present, the price of refined oil in China is not in conformity with the international oil price.

If we do not raise the price of finished oil, the market demand can not be restrained, the burden of national financial subsidies is too heavy, and the phenomenon of oil wasting by enterprises and ordinary people can not be controlled.

Now many refineries, lack of enthusiasm for production, resulting in oil shortage, queuing to buy oil.

This is a vicious circle.

The other side of the matter is that oil prices continue to rise, which will inevitably lead to price increases.

So even though the price of refined oil should be raised, but to what extent, it is a proposition that needs to weigh the pros and cons of all aspects.

At present, the combination of policies is manifold.

From a monetary policy point of view, raising interest rates raises interest rates, which controls credit and controls credit.

The intensity and timing of regulation are very important.

For fiscal policy, we can take the way of optimizing the structure of fiscal expenditure to pform public finance.

Zhang Xiaojing: if the inflation pressure is eased in the second half of the year, the price of oil and electricity can be tolerated within a tolerable limit.

However, such price adjustment must be controlled within the limits of inflationary pressures, so it may be a minor adjustment.

China has not encountered too many problems in the consumption level this year. The next step should be to take certain measures at the supply level, such as increasing incentives for enterprises, structural tax cuts and reducing production costs. For example, the reform of oil prices and grain prices should be combined with market mechanisms.