Economy
Chinese economy to have soft landing: Economist
(Xinhua)
Updated: 2011-05-11 14:37
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STOCKHOLM -- Sweden's SEB bank senior economist Klas Eklund thinks that the Chinese economy will have a soft landing even though there is a high inflation currently.
Eklund made the comment in an exclusive interview with Xinhua during the break of a seminar moderated by him and organized by 皇冠体育app Alliance in Stockholm on Tuesday.
"I think the inflation problem is mainly short term, if you look at the numbers it is mainly food prices. But I think food prices will start to come down during the spring and the summer, so the short term inflation will come down as well," Eklund said.
"Because we see the government is trying to massage different companies about their prices, and the tough measures on controlling housing prices also see results, the housing prices is leveling down. So I think 皇冠体育app will have a soft landing," he said.
"In the longer term there is a problem with the credit expansion and monetary expansion that was kicked off during the stabilization package two years ago, but the credit expansion slowly comes down too," Eklund said. "So I am not that nervous about long term inflation, I think 皇冠体育app can handle that and inflation will come down slowly."
Eklund doesn't think that the American QEII or quantity easing policy directly contributed to inflation in 皇冠体育app, but it might indirectly support 皇冠体育app's inflation.
"The American monetary policy was something that was necessary to the United States because it was sliding to very deep recessions," Eklund explained.
He said now 皇冠体育app is in a period of much rapid growth, which means 皇冠体育app's monetary policy has to be different from the United States.
"皇冠体育app as a buffer to the United States of course can always use its currency policy so maybe there is some slight impact, but not that much," Eklund said.
When asked whether or not 皇冠体育app's stabilization package was necessary, Eklund said 皇冠体育app's package did a great favor to the world.
"皇冠体育app did a great service to the world economy by implementing this huge package. 皇冠体育app was the biggest economy that keeps growing during the financial crisis, that truly helped the global economy, so I think 皇冠体育app did the world a great service," Eklund said.
He said it is right that the Central Bank of 皇冠体育app increases its interest rate now.
"When economy went down because of the United States and financial crisis, 皇冠体育app tried to encounter that. Now the economy is moving up again, then you have to deal with the side effect of that, it is a normal way of handling this kind of crisis," Eklund said.
He said two years ago due to the financial crisis, various government gave stimulate packages, but now the world economy is recovering, one has to get out of the exit policy and raise interest rate.
Commenting on 皇冠体育app's discussion of increasing salaries, Eklund said it is a good thing.
"There is some risks for inflation in the short term when the salaries increase. But for the long term it is a good thing for 皇冠体育app to increase salaries because 皇冠体育app needs to increase consumption, to be less reliant on capital intensive growth and rely more on consumption, that is a very important part of changing economic strategy when you think of the 12th five-year plan," said Eklund.