While combating inflation and excess liquidity, the nation's financial regulator should also be wary of possible stagflation, the Shanghai Securities News quoted a noted economist as saying on April 20.
Speaking at a financial expert forum in Beijing, Tang Shuangning, chairman of the China Everbright Group and also a well-known economist, said the nation faces the threat of both inflation and stagflation. It is justifiable and necessary to adopt a tightening monetary policy in order to prevent the economy from going too fast, but monetary policy alone or improper use of it could cause a dilemma.
In order to address the problem, he suggests the government increase agricultural investment to secure food supply and stable prices. Therefore, it is necessary to combine monetary tools with other means such as credit and fiscal policies to support rural production.
(Chinadaily.com.cn April 22, 2008)
