Chief Economist, Bank of Communications
The liquidity will be pretty much next year with stimulating projects and recovery of confidence. Current deposit-lending ratio of financial institutions is 67%, less than the required level 75%. Direct finance will also accelerate. Next year's nonfinancial IPOs will be 500-600 billion yuan. Bond issuing will exceed 1.5 trillion yuan. Besides, rising foreign exchange reserves will bring additional liquidity into domestic market.
There are concerns and uncertainties as well. Firstly, inflation might recur. Pork prices are rebounding again. Expectation of dollar depreciation will boost international commodity prices. Monetary expansion increases probability of future inflation. Secondly, asset prices grow fast. Stock market bubbles may come out next year. Thirdly, massive hot money may enter
Monetary policy should become moderate and robust. Required reserve ratio should be adjusted. Discriminatory required reserve ratios are applicable. Lacking of flexibility, credit control is not desirable. Interest rates should be carefully managed as interest rate gap between