China has announced it has shifted its monetary policy stance from “prudent” to “tightening” in another sign that Beijing is concerned about the acceleration of an economy already growing at double-digit rates.
The decision, formally taken at an annual economic conference in Beijing this week, signals growing concern that investment, the prime driver of growth, is picking up pace again on the back of rising construction.
The government is also concerned that inflation, which has so far been confined to food, could spill over into other sectors. The change in language symbolises such concerns and will give policymakers, including the central bank, greater leeway to dictate the lending practices of local financial institutions.
Construction growth sagged slightly between 2004 and 2006 on credit tightening and restrictive land policies, but is now on track to grow 25 per cent year on year in 2007 and 2008, according to Dragonomics, a Beijing consultancy. The new boom has been driven by the government’s determination to boost low-cost housing as part of its broader policy to distribute the benefits of economic growth more evenly.
瑞银(UBS)驻香港的乔纳森?安德森(Jonathan Anderson)表示：“我不认为(中国央行)想要降低内需。央行只是想要避免任何形式的过快增长。” “I don’t think the [central bank] wants to slow down dom?estic demand. It just wants to avoid any acceleration in growth,” said Jonathan Anderson, of UBS, in Hong Kong.
The economy grew 11.5 per cent in the first three quarters of this year. In a poll of investment bank economists published by Reuters yesterday, all said they expected growth to exceed 10 per cent again in 2008.
Persistent inflation is of particular concern, with new monthly figures for November, due to be released next week, on track to break the highs of August and October of 6.5 per cent, because of continued strong food prices.
“The government should take powerful measures to restrain the general level of prices from increasing too fast, and strengthen the production of life necessities...” a statement released after the conference said.