How to cool down China's economy???

How to cool down China's economy???
Sep 6, 2007 20:52
JOHNNY512 Points: Join Date: Nov 29, 2004 Status: offline	Yesterday, People's Bank of China declared that it will raise reserve ratio by 0.5% from September 25th. This is the seventh time China has raised the reserve ratio. The move aims at strengthening the liquidity management in bank system and checking the excessive credit growth. Why did the central government adopt this measure seven times? Not long before, China has admited that China's economy is overheated. But the inflation won't outbreak. The purpose of the moves is to cool down China's overheated economy and rising inflation. On other hand, it will help to stablize the soaring price. To raise the reserve ratio has become the routine measure that central government adopts. But it seems that this measure has not taken effect positively. It is estimated that the CPI in August might exceed 6%. Experts analysed that this not the last time China raises the reserve ratio. If the situation continues, central government might raise the reserve ratio again. Confronted with excess liquidity and rising inflation, China attempts to solve these problems by raising reserve ratio. However, this measure can not solve the problems thoroughly. What do you think of China's economy? To ease liquidity and rising inflation, is there any other ways?

Sep 6, 2007 20:52

JOHNNY512
Points:
Join Date: Nov 29, 2004
Status: offline

Yesterday, People's Bank of China declared that it will raise reserve ratio by 0.5% from September 25th. This is the seventh time China has raised the reserve ratio. The move aims at strengthening the liquidity management in bank system and checking the excessive credit growth.

Why did the central government adopt this measure seven times? Not long before, China has admited that China's economy is overheated. But the inflation won't outbreak. The purpose of the moves is to cool down China's overheated economy and rising inflation. On other hand, it will help to stablize the soaring price.

To raise the reserve ratio has become the routine measure that central government adopts. But it seems that this measure has not taken effect positively. It is estimated that the CPI in August might exceed 6%. Experts analysed that this not the last time China raises the reserve ratio. If the situation continues, central government might raise the reserve ratio again.

Confronted with excess liquidity and rising inflation, China attempts to solve these problems by raising reserve ratio. However, this measure can not solve the problems thoroughly.

What do you think of China's economy? To ease liquidity and rising inflation, is there any other ways?

Sep 6, 2007 22:55

LEOPOLD219
Points:
Join Date: Feb 7, 2007
Status: Offline

Raising the reserve ratio seems to have become an outdated tactic to handle China's overheated economy and rising inflation. If the inflation continues rising, people have to pay more for the daily livings. Increasing the reserve ratio to contain people's desire of consumption is not a good way out. The best way out is to contain the source of the roaring price of consumer goods. Government should not let the market decide everything. Drastic measures should be taken to contain the mad price increase. The Laissez-faire policy will lead to a catastrophe.

Sep 12, 2007 01:30	#2
DREAMLIFE Points: Join Date: Sep 5, 2007 Status: Offline	The government should improve and expand the expenditure on the public services since the financial revenue becomes more and more. If the public services has been improved and expanded, people will feel eased to consume.

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