ChinaBlog.George.Yuyu.Huang

Price Soaring, Money Controlling

People’s Bank of China, china’s central bank, issued a report couple of days ago in which the excessive liquidity and export surplus were highlighted, showing the decision-maker’s concern on financial risk along with the trend to inflation.

The updated CPI spurred the debate on whether china’s macro economy is overheating. Most officials said the economy is on the track although it is a little bit fast. They emphasized that the CPI, in fact, is no more than 1% if the factors of food has been eliminated, that the consumption of citizens has contributed more than it was in the last year and that the income of both farmers and citizens soared significantly. However, many economist and financial institutions predicted that the economy is heating amid the impulsion of local officials to boost more projects if the central government does not take harsh measure to restrain the loan that fuels the investment.

The PBC proclaimed the economical environment is optimistic. But it is not the real judgment of the policy-makers on the economy, otherwise Wen Jiabao, the prime minister who is responsible for economy in CPC, should have not visited the food market several times and convened special meeting to discuss the issue of consumer price.

China Banking Regulatory Commission, china’s banking system watchdog, has asked the state owned banks to tighten the loan to housing. Several banks have raised the threshold of the loan for housing.

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