熊眼小窥

China will adjust credit structure and deal with inflation expectation in its macroeconomy policy while sticking to proactive fiscal policy and moderate monetary policy, according to Cao Wendong, Vice chief of Department of Fiscal and Financial Affairs of National Development and Reform Commission on July 31, 2009.

The rapid increase of credit lending played an important role in expanding domestic demand and maintaining economy growth. However, it also poised a severe challange to next step’s macroeconomic control, Cao said during a summit focusing on people’s livelihood.

China mainly increase investment and fluidity in economic policy since the financial crisis. In the first half of 2009 China issued 7370 billion credit loan, an increase of 4920 billion year on year.

The policy has proved effective from the economic figures of the first half. While a new round of price hike in real estate market aroused the fear of realty bubble. China’s realty price is said to be close to the price level in 2007, which signals the formation of bubble. Meanwhile, the benchmark Shanghai Composite Index rose above 3400 points, which is hardly a sign of economic recovery.

Chen Siwei, the former Vice chairman of the Standing Committee of the National People’s Congress, indicated an inflow of credit loan into China’s A shares market and realty market on June 27 during a financial summit in Ningbo City, southeast China’s Zhejiang. He said the credit inflow contributed to the recovery of two markets.

“Many small and medium enterprises are  still starving despite of a rapid credit lending. About  50 percent of credit loan flew to stock market, real estate market and bill market,” said Wei Jianing, vice minister of Department of Macroeconomic Research of Development Research Center of the State Council.

In order to better use the credit loan to help out the small and medium enterprises, China Banking Regulatory Commission tightened the housing loan policy of second house purchase for one family. Though gov’t aimed to control the situation realty investment would remain overheated in long term due to inflation expectation and scarce investment channels in China. The fever stock market also reflects the same situation.