Why have been afraid to monetary policy is called "loose"
Posted by cheap hats on Friday, February 3, 2012
Under: business
Although China to the market economy in excessive, but the government economic management practices or old tradition. Economic growth, the money supply, price target, industrial planning, land supply, even people life and increasing farmers' income, the need for government annual management, by the end of this year it is the Chinese government's decision to economic policy's big day.
2010 years of the communist party of China central economic work conference is over, meeting offered to stabilize prices, and monetary policy loose by "moderate" for "robust" now. This means that monetary policy official turned, from expansionary regression neutral. Of course, China's currency policy "robust" flexibility is bigger, for many years, monetary policy is called "robust" though, but sometimes loose, sometimes tight, this is the Chinese characteristic. Even if want to let loose a little money and credit, also can't call "loose". In 2009, in response to the international financial crisis, monetary policy to "moderate" loose, the result would have become "extremely loose," currency credit growth, a year more than two years before the incremental combined, and the results lead to inflation, now have to rush to extinguish fire.
Because the money supply a "loose" is messy, so China's central bankers have been afraid to ask "loose monetary policy".
In January 1999, I in the people's bank of China of the subordinate to the financial morning post as editor. That year in January, I interviewed the governor of the people's bank of China. Because I worked for the newspaper for the central bank subsidiary body, so was MLB hats allowed to listen in on governors will close the door. In talking about monetary policy formulation, the provincial branch of governors to word is very sensitive. Everyone is common in monetary policy, never mention "loose" 2 words. They say, if monetary policy loose called "moderate", local government would be forced by local commercial bank lending, money supply will actually be "extremely loose". Such consensus, after 10 years of the 2009 tested.
Why monetary policy cannot call "loose"? This is mainly with the local government investment on impulse.
In the consumer is not busy premise, local stimulate economic growth is the best way to increase investment. By expanding investments to realize the industrial chain expansion, which increases the total GDP. In 2009 China economic stimulus policy clear to increase the infrastructure and the people's livelihood investment, but the local government through the local financing platform, the actual increase manufacturing investment, and through the fiscal stimulus spurs the credit stimulation, this makes the already existing manufacturing capacity surplus aspect becomes more serious. Because each local government all think that their own manufacturing enterprise competitive, and the result is the evolution of the overall investment excess. This phenomenon is called the "game theory will lead to the individual rationality collective irrational".
Facing local government leadership investment, by rights should be rational commercial bank loans, but China's political and commercial bank to bank system actual cannot independent lending policies. On the one hand commercial bank head office head is political people, they all want to speak political; On the other hand, commercial Banks local agencies is also constrained by the local government.
The banking system has set up a file in the 10 years ago is big different, the central bank closing provincial branch, the state-owned commercial Banks, the stock system reform, but for a long time the government to bank credit to eliminate the influence of. Because the Chinese cheap new era hats characteristic decided to commercial bank branches in place to live, have to rely on the support of the local government. The reason is that the government power is strong, the government boundary didn't get defined, any enterprise have to survive in government regulation. If local commercial bank not according to the local government loans to mean, it is very possible by the local government of all kinds of interference, in addition to the normal business is restricted, and even personal life will be affected, for example, the local government would order the local schools and kindergartens restricted bank staff their children to school, and so on.
Bank reform the masters of the recognised this problem, also want to through the bank reform to achieve the purpose of local governments to avoid interference, but results show that in the reform of the political system of China lags behind, the idea is naive. And in 1999, the people's bank of China on the historic reform, provincial branch will be revoked, reconstruction for regional line, in order to realize independent management place monetary and financial purposes. Although regional line can be independent of local government supervision work outside, but local government is also don't let the original of the central bank management department at the provincial level understanding of local economic conditions, including don't let the central bank officials to take part in local government's economic conference, the central bank management to a lot of trouble.
See more:The tax cuts is the trend of The Times
Pedantic also can let people with uremia disease
In : business