China Financial Daily

Development and Reform Commission experts: loose monetary policy in the second half of partial stability
According to foreign reports, National Development and Reform Commission Chen Dongqi, vice president of Macroeconomic Research, said China is in the extended phase of deflation, but inflation should pay close attention to signal changes in monetary policy later this year will be loose in the stable side, there was still room for fiscal policy .

Chen Dongqi said, should pay close attention to the curves of M1 and M2 change. At present, M1 (narrow money supply) is less than M2 (broad money supply) is a deflation, when M1 greater than M2 when inflation began.

“The M1 is less than M2, but the openings began to converge, M1 fast growth means that ordinary people to deposit money into live shows that reality is likely to increase demand. Once the M1 and M2 will be cross-draw attention, this is inflation signal. “he said.

For the second half of the policy orientation of macroeconomic regulation and control and measures to do so, Chen Dongqi, the main focus by the total amount of regulation to promote sustained economic growth; focus on reform and opening-up institutional mechanisms to promote innovation; structural adjustment efforts to promote the development of model.

He said that the second half of fiscal space should be there, the Government may take measures to implement the structural tax, resources tax and income tax adjustment, the distribution of national income to break the monopoly and perfect competition in the market mechanism and accelerating the reform of the financial system and product innovation.

And macroeconomic policies should remain “positive + moderate liberal” orientation of the same, will be loose in the stable bias. He said that this time the stability of monetary policy to the appropriate point, which is mainly reflected in interest rates in order to stabilize the economic trends.

Chen Dongqi expected, CPI may turn negative 8,9 for months now, PPI may be negative in October after a positive turn.

Prior to the National Bureau of Statistics announced that the May CPI fell 1.4%; PPI fell 7.2% year-on-year.

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