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Experts: Cooling inflation leaves room for policy adjustments (5)

By Lu Hui (Xinhua)

14:03, November 14, 2011

By the end of September, the gross M2 stood at 78.74 trillion yuan (12.4 trillion U.S. dollars), about 1.8 times more than China's gross domestic product (GDP). In 2008, it was only 1.54 times larger than the GDP, Zhang said.

According to a statement released by the State Council on Oct. 29, China will continue tough measures to keep consumer prices stable.

Meanwhile, more work should be done to ensure food supplies, improve the country's distribution system and strengthen price regulation, in a bid to combat inflation.

Fine-tuning monetary policy

The eased pressure of price rises combined with weak US recovery and prospect of a recession in Europe sparked market speculation that there would be some loosening of economic policies by the government for the rest of the year. Analysts, however, say the government is most likely to maintain the fine-tuning stance and that the possibility of loosening the monetary policies is low.

"It is hard to say whether inflation pressure has been fully curbed or not, so we cannot relax money supply in the future to stabilize economic growth. Otherwise, it may add fresh pressure to inflation," Fan Jianping, chief economist at the State Information Center, was quoted as saying by the official China Securities Journal.

For the time being, China's economic development is faced with a complicated internal and external environment as economic growth slows down, external demand dwindles, and cash-strapped small and medium-sized enterprises are faced with operating difficulties. Amid this background, keeping stable economic growth has become the new challenge of macro economic control.

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