The Central Economic Work Conference Will Be Held Soon; &Nbsp; Monetary Policy Needs To Be Refined.

There are signs that liquidity is flooding through C PI and

What is worrying is that the factors that cause this kind of liquidity overflow are not only eliminated but also increasing.

For example, in order to resist the impact of the financial crisis, a large amount of money that has been overloaded has been deposited in the social and economic life. In order to maintain rapid economic growth, it is necessary to maintain an appropriate increase in the amount of money invested; the large amount of foreign exchange accumulated in the foreign trade surplus also needs to put more people in the currency to hedge; the "quantitative easing" policy implemented by the United States releases new liquidity in the whole world.

How to manage the continuous growth of liquidity over a long period of time is undoubtedly a severe test of China's monetary policy.

Another test of monetary policy is how to ensure the monetary needs of China's steady and rapid growth. 2011 is the beginning of the "12th Five-Year plan" and the year when the economic restructuring is going to be developed in depth. Both development and adjustment require higher capital investment.

At the same time, the process of urbanization in China is far from complete, and it needs a large amount of capital investment. The real estate sector has been connected with a large number of funds still accumulates, and tens of thousands of consumers and all kinds of commercial banks are connected. In the process of large-scale infrastructure construction, the rapid growth of local financing platform, and the digestion of projects also cannot be separated from new inputs.

All these indicate that excessive contraction of liquidity is bound to bring greater risks.

For example, tightening monetary policy has led to a decline in valuation of Renminbi assets, a decrease in land revenue, and increased debt pressure on local government financing platforms.

If "rigid regulation" endangers economic growth, it is likely to deflate the "gourd" while pressing inflation.

This will be a worse result.

It can be seen that the current monetary policy is facing the choice of "dilemma": to protect growth and prevent inflation, and the upcoming central economic work conference is bound to make a choice.

The author thinks that in this case, the "two sides" strategy can only be "meticulous operation", that is to say, in the process of "returning to normality", we should increase flexibility and increase flexible adjustment mechanism.

First of all, we should use interest rate tools flexibly, adjust interest rates timely and appropriately according to the actual situation of economic operation, and adjust the demand of money by means of marketization.

In this way, those enterprises with large loans, high asset liability ratio and lack of competitiveness will inevitably consider the cost of financing and save capital, and those small and medium-sized enterprises with vigor and competitiveness will also have the opportunity to get financing from financial institutions.

Secondly, we should have flexibility in guarding against "hot money".

If the "hot money" inflows too much, the operation should be in the direction of tightening, if the economic recovery of developed countries speed up the "hot money" return, it should be appropriate to relax the operation.

With the changing situation, dynamic adjustment will increase the foresight and flexibility of policy.

Thirdly, in line with the adjustment of economic structure, there are "entry" and "retreat" for different industries and projects.

We should take measures such as limiting loans, stopping loans and collecting loans for illegal construction projects. We must strictly prohibit any form of new loans and credit for projects which do not conform to the national policies of high energy consumption, high pollution and high emissions, and increase credit support to emerging industries under the control of risks.