2016-03-09

Yu Yongding: Out of Options, Then Large Scale Stimulus

Yu Yongding stressed that this is not the best choice, but if there is no other better option, then forced to face the choice. "Once the government announced a massive stimulus plan, the market may soon be lifted, there is good news for a good story, the RMB will not be devalued, capital flight did not need to escape, the capital on the Chinese may have a relatively high return. With such a confidence boost, coupled with other measures, including the exchange rate regime reform, banished in the end or the wide, wide in fact, is to let the yuan devaluation in the end, together with capital controls, the exchange rate stabilized, after the peace of mind to stabilize the market, the entire economy will be able to successfully promote the construction"

...I have repeatedly stressed that now is deflation period, because of excess capacity so the price decline, mainly refers to PPI, price declines in business is very difficult, less and less profit, it is necessary to reduce the capacity to invest, even if bank lending to it, it banks do not give loans, banks are reluctant to lend, thus causing further deterioration of overcapacity, which is clearly a vicious cycle, it is necessary to adopt methods curbed, in all countries, deleveraging at the same time, if the effective lack of demand, then, to add leverage in another place, European countries such as the United States is such that Japan is such that no country is an exception.

...Many people worry that money wasted, and this fear is entirely reasonable, how do we do, there is no better way, and now why so many foreign withdrawal, why so much pressure on the devaluation, because it no confidence, no confidence one very important is not necessarily the devaluation itself, the devaluation of the renminbi is expected to a large extent, is the lack of confidence in China's economic growth.

If you do once the government announced massive stimulus plan, the market may soon be lifted, there is good news for a good story, the RMB will not be devalued, capital flight did not need to escape, the capital on the Chinese may have a relatively high return . With such a confidence boost, coupled with other measures, including the exchange rate regime reform, banished in the end or the wide, wide to let the yuan actually banished in the end, together with capital controls, the exchange rate stabilized, stabilized market is relieved, the whole economy will be able to successfully advance the construction, or else on tenterhooks all day, where to go renminbi devaluation, capital fled to where to go, and that there is no way to promote economic development.
iFeng: 余永定:中国“大规模刺激” 是没有更好选择的选择

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