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Yi Gang: The Space Of Monetary Policy Has Become Narrower And Narrower.

2011/1/12 10:39:00 47

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In an article published in the latest issue of China's foreign exchange, the vice president of the central bank and the foreign exchange bureau, Yi Gang, said that the space of monetary policy, including price instruments and quantitative tools, is becoming narrower and narrower. The key is to expand domestic demand, adjust the structure, reduce the favorable balance and promote the balance.

Yi Gang, for example, said that while raising interest rates to curb inflation, it also attracted the influx of "hot money". The statutory reserve requirement rate has reached a historical high point. The short-term capital control method is effective, but the effect of long-term implementation will be weakened, and it will easily affect normal trade and investment activities.

He pointed out that the root cause of China's inflation pressure is a large current account surplus.

The excessive surplus caused the pressure of currency appreciation, and in order to alleviate the pressure of appreciation, the central bank was forced to buy foreign exchange in the market and put in a large amount of basic currency.

Despite the large-scale hedging operation, market liquidity is still abundant, causing inflation expectations.

Since the issuance of central bank bills in April 2003, the large-scale hedging operation has lasted for eight years. As at the end of 9 2010, the hedge ratio (the balance of deposit reserve + the balance of central bank bills) / the balance of foreign exchange accounts for about 80%.

Therefore, he believed that expanding domestic demand, adjusting structure, reducing favorable balance and promoting balance were the key to deal with the second round of quantitative easing policy in the United States. The balance of international payments trend was also included in one of the main goals of economic and social development during the "12th Five-Year" period.

Yi Gang said that the next stage, the relevant departments should comprehensively apply economic, legal and necessary administrative means, and strive to expand domestic demand in 2011 to reduce dependence on external demand, appropriately raise wages and social security levels, strictly enforce environmental protection and energy conservation and emission reduction requirements, vigorously push forward the reform of resource products prices, further enhance the RMB exchange rate flexibility, reduce trade surplus or current account surplus, appropriately regulate the speed of economic growth, and improve the quality of economic growth.

According to the data released by the General Administration on 10 th, in 2010, China's foreign trade import and export value was US $2 trillion and 972 billion 760 million, an increase of 34.7% over the same period last year, and foreign trade has basically expanded to a basically balanced level.

In 2010, China's foreign trade exports amounted to 1 trillion and 577 billion 930 million US dollars, an increase of 31.3%; imports of US $1 trillion and 394 billion 830 million, an increase of 38.7%, and a trade surplus of US $183 billion 100 million and a decrease of 6.4%.