Chinese official media reported that Ma Jun, a member of the Monetary Policy Committee of the People’s Bank of China, pointed out at a seminar that a bubble has emerged in China in some areas. Several key Chinese indices have risen sharply in the last year, by nearly 30 percent, contrary to the country’s economic growth.
Ma Jun believes that the stock market has risen so much in spite of the sharp decline in economic growth, which cannot be unrelated to monetary policy. On the other hand, the recent sharp rise in housing prices in Shanghai, Shenzhen and other areas are all related to liquidity and expanding leverage.
He alleges that whether this situation will deepen in the future depends on whether the Bank’s monetary policy is going to make a moderate turn this year. If it does not turn, these problems will certainly persist and will also lead to greater economic and financial risks in the medium and long term.
However, Ma Jun also stressed that the monetary policy shift cannot be too fast. At present, China’s Inflation rate is not high, CPI this year will be “better” than in previous years, because last year’s pork base period effect. As for the PPI will go up, but not too much, the Bank also did not want to change too fast.
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