Song Guoqing Feels That Monetary Tightening Pressure Has Eased

According to the advisor of Central Bank of China, Song Guoqing, the pressure on Chinese Government to tighten the macroeconomic controls and monetary policy is easing down now. The food price gains have slowed down in March leading to a relatively low inflation. This incident attributed to comments of Song Guoqing, as believed by many of the economists.

Song stated that in his view, the pressure is now less, when compared to what it was in both January and February. Song further commented that this is good news for the growth prospect of the country. Apart from this, Song also predicted that the 1st quarter expansion of Chinese economy will increase to 8.3%.

In each of the 2 weeks since the end of Lunar New Year holiday ended on 15th February, the People’s Bank of China has drained cash from the financial system. This resulted into a speculation that the Chinese Government is tightening the monetary policy and inflation is actually going to a higher level. Amidst all these, the real estate price gains have been excessive as well. On 1st March, the State Council stepped up efforts for cooling down the property market of China. The annual meeting of the country’s legislature is scheduled to start this week and during the same, Li Keqiang will take over from Wen Jiabao as the Premier.

According to news report published by the Shanghai Securities News, Jiang Weixin, the Housing Minister of China is confident that the Government will succeed in controlling home prices. Incidentally, Jiang is also a member of the Political Consultative Reference of Chinese People.

In last 3 months of 2012, the Chinese economy had increased by 7.9%, marking its first pickup in last 2 years. According to many economists, the same should increase to 8.2% in the 1st 3 months of this year. In the 2nd half, the Gross Domestic Product may however go down to 7.3%.

Song works as a Professor for the Peking University and he affirmed that the low inflation is still the major objective of the monetary policy of China. Song is a member of the monetary policy committee of People’s Bank of China and one of the 3 academics present in the same. Song said that as the comparative of last year’s 1st quarter was low, in 2013, there should be higher growth.