China walks fine line to preserve growth while fighting inflation
Updated: 2008-01-26 10:24
Chinese monetary authorities also find that they may have something in common with the US Federal Reserve: that is, hindsight is clearer than foresight. Some commentators think that the central bank here, like the Fed, should have taken different actions, years ago.
For example, Song Guoqing, a professor with Beijing University's China Center for Economic Research, said that China should have acted years ago to adopt a tight monetary policy.
The People's Bank of China decided in December to shift its monetary policy from "prudent", an approach it has followed for the past 10 years, to "tight." But like the Fed, did it perhaps wait too long?
Customs figures showed that China's trade surplus, a key source of liquidity, suddenly tripled to a record US$102 billion in 2005. The surplus had more than doubled again by the end of 2007, to US$262.2 billion.
During this period, foreign exchange reserves almost doubled from US$818.872 billion in 2005 to US$1.528 trillion last year.
Despite the uncertainties, however, the majority of economists and analysts agree with Chinese officials that the outlook for the economy is largely sound and positive.
Morgan Stanley's Wang, for instance, has predicted a soft landing, with China's GDP growing 10 percent this year -- a figure many countries can only envy -- and CPI rising to four percent this year.
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