China to adopt ’prudent’ monetary policy in 2011
China is likely to continue the proactive fiscal policy but shift its monetary policy from "moderately loose" to "prudent" in 2011, China Business News reported on Tuesday, citing two sources close to policy makers.The Central Economic Work Conference, usually held in December every year, will review the country's current "proactive fiscal policy and moderately loose monetary policy," according to the paper.
The policy adjustment could mean that China will further tighten its monetary policy following the central bank's first interest rate hike in three years in mid-October, the report said.
China may lower its money supply target and tighten credit control in 2011, said the sources.
China's GDP growth rate is expected to exceed 10 percent this year, and consumer prices may rise more than 3 percent from 2009, the paper said.
Manufacturing continues to expand
"We predict next year's GDP growth will slow down to about 9.3 percent," the sources told the paper. "But CPI (consumer price index, a main gauge of inflation) will be above 3 percent, even hitting 4 percent next year, and we expect it to grow about 3.5 percent" for the whole year of 2011.
Economic Information, a Beijing-based daily run by the official Xinhua News Agency, said on Monday that China's CPI may jump 4 percent year-on-year or even higher in October, and that China is facing an increasingly bigger inflation pressure in the long run.
China's consumer prices rose 3.6 percent year-on-year in September, the highest in 23 months, with food prices jumping 8 percent year-on-year, according to statistics released by the National Bureau of Statistics.
The Chinese-language magazine China Economic Weekly said Tuesday that the central bank's oversupply of money, the "super loose" monetary policy adopted in 2009 in response to the world financial crisis in particular, was to blame.
The magazine, citing official statistics, reported that China's broad money supply (which covers cash in circulation and all deposits) reached 69.64 trillion yuan ($10.36 trillion) by the end of September, nearly 43 trillion yuan higher than the country's GDP of 26.87 trillion yuan, in the first three quarters.
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