2014-09-17

People's Daily Rebuts Xinhua: Rate Cuts Not The Opposite of Reform

Xinhua says Still Not Time For Rate Cuts; Don't Quench Thirst With Poison

The People's Daily says: Rate Cuts Are Not The Opposite of Reform
人民财评:降息不是改革的对立面

After three quarters of domestic macroeconomic announcement, the market for the central bank to cut interest rates, lowering expectations quasi again heating up. In the domestic industrial added-than-expected decline in investment in fixed assets dropped significantly, GDP growth fell to close to 7 percent of the situation, not to cut interest rates for the debate rampant. Objections even expect interest rates to rise to the height of the reform of distrust.

In fact, I believe that the market expects interest rates and whether to trust reforms are not necessarily related. China's economic "new normal" is to respect the laws of economic development itself, to take flexible monetary policy at different stages is a general consensus, whether to cut interest rates, lowering quasi should depend on the actual situation of economic operation. Future, without changing the direction of monetary policy, while the possibility of directional or directional RRR cuts still exist.

Rate cut is not the opposite of reform. In the midst of the economic situation, to take flexible monetary policy, not only does not change the objectives of the reform, it will not change the path of reform. Since the Third Plenary Session of eighteen, the Central Government has been actively promoting reform, structural adjustment, improve people's livelihood. The elimination of backward production capacity, development of emerging economies has become the common aspiration of the government and the market. According to Xinhua News Agency, in the first half, and the proportion of tertiary industry growth rate over the second industry. In the current market environment, even if the implementation of targeted easing, China's economy can never be returned to the government-led large-scale investment projects, forcibly pulling the era of economic growth. In contrast, under structural adjustment to achieve substantive results of the premise, the "three rural", "small and micro enterprises", "emerging economies" field "directed down quasi" or "directional cut" but will help ease restricting China's economic transformation and upgrading The negative factors. The central bank in April and June this year, has conducted two "quasi-directional drop" intention is the case.

Rate cut is not the opposite of reform. Economic cage for birds also need liquidity support, the early 21st century, the American Internet economy can successfully transition to the bubble in the shock, there is a direct relationship with the Fed's loose monetary policy continuously. Currently, some of the reason for the cuts and reform of public opinion in opposition, mainly worried about the local government back to the idea of ​​a large demolition and construction grew up, and this is precisely the lack of reform embodied faith. Macroeconomic data released by the National Bureau of Statistics on the 13th showed that from January to August of fixed asset investment growth was 16.5 percent, down 0.5 percentage points compared with January-July, continuing the downward trend. Under the policy guidance, market regain enthusiasm for the development of emerging economies, the subject of an active domestic capital market is gradually transition from infrastructure to the new energy vehicles, nuclear power, TMT and other high-tech fields.

Is not equal to the full directional loose loose, carefully evaluate these changes, timely guide funds to promote industrial upgrading, guide balanced regional development, stimulating consumption, and expand the fruits of reform.

Fan Jianping, chief economist at the State Information Center this morning in an interview with People's Daily said in an interview on economic policy interpretation should not politicize economic situation changes, policy should be timely and appropriate adjustments. "Should not be put in opposition to cuts and reform." Interest rates hike is discretionary policy choices, not to "exaggeration", "exaggeration" would kidnap policy choices, lost time window will regret. He stressed that reduce financing costs (including interest rates) at the earlier of the State Council on the need for the documents in a systematic presentation, the real economy is conducive to maintaining stability. There are many ways to reduce the cost of financing can innovate, reform itself, such as the interest rate market can not go back.

Data show that in August the national CPI rose 2.0%, or down 0.3 percentage points higher than in July, the highest since the four-month low, inflation pressures under control. The slowdown in China's industrial growth has been extended from the local industry to the general slowdown in key areas, key industries. A number of agencies that the current Chinese economic downside risk is greater than the risk of inflation. At the insistence of the reform of the overall premise of how to go at the crossroads of China's economic vibrancy is severe and urgent problems.

However, bearing in mind the need to reform the system to create the conditions for growth, while the growth from the market.

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