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Thread: How to cool down China's economy???

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[quote=JOHNNY512,245393]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?[/quote]

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