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People's Daily Online>>Opinion

China fine-tuning macroeconomic policy

By Gao Yuncai (People's Daily)

17:01, December 06, 2011

Edited and translated by People's Daily Online

The People's Bank of China announced on Nov. 30 that it would cut the reserve requirement ratio for commercial banks by 0.5 percentage points starting Dec. 5, which was the central bank's first cut in the reserve requirement ratio in nearly three years. The move indicates that China is fine-tuning its monetary policy in a timely and proper manner in accordance with the current economic situation while keeping the policy's overarching theme unchanged.

"China's stable and relatively tight macroeconomic policy has produced the desired results," said Lu Zhongyuan, deputy director of the State Council's Development Research Center.

Modest slowdown in GDP, CPI opens door for fine-tuning

The internal driving force for China's booming economy has been enhanced, and the country's economy has exhibited certain new characteristics. Overall, the time has come for China to make proper fine-tuning on its macroeconomic policy, Lu said.

Lu believes that the modest slowdown in the growth of GDP and CPI has created an opportunity for China to properly fine-tune its macroeconomic policy

Fine-tuning measures introduced

Ba Shusong, deputy head of the Institute of Financial Studies under the State Council's Development Research Center, said that China is fine-tuning its monetary policy while keeping the policy's fundamental design unchanged. The cut in the reserve requirement ratio can be regarded as a signal that the central bank may periodically launch structural loosening, while maintaining a prudent monetary policy.

Although the focus is not changing, fine adjustments are also being carried out on the proactive fiscal policies. First, pilot projects of value added tax reform are being carried out for structural tax reduction. Second, pilot local debt projects are also being carried out to provide financing services for local economic and social developments.

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