_News Center_China International Fair for Investment & Trade (CIFIT)

The large number of construction projects in progress, combined with a rigid exchange rate, should give the government cause to reconsider implementing a stricter monetary policy in the short run, the Chinese economist, Ha Jiming, said at the 2009 Capital Forum in Xiamen yesterday.

“China may need to stick to relatively loose economic policies because too much adjusting at the current stage could hurt the recovering economy,” said Ha.

A substantial amount of government funding has been invested in the infrastructure construction sector, with most projects requiring many years before reaching completion. Continuous ?nancial support is required, according to Ha.

“With the number of new projects on the rise, a tighter policy will lead to banks incur an enormous amount of bad debts,” said Ha.

“If the government implements this policy before the US stops stimulating its own economy, then investors will be inclined to bring capital from the overseas market. This great in?ux of foreign capital could pose a huge problem,” said Ha.

China economy is entering into a quick recovery stage by bene?ting from the four trillion yuan stimulus package introduced by the government.

Chinese economist, Fan Gang, also attended the forum. He said that the GDP this year is expected to be eight percent with three percent contributed by the government expenditures.

The GDP growth in 2010 is forecast to remain at eight percent, with factors other than government expenditure contributing to growth.

“We expect to see a big improvement in the property investments sectors. Many blocks of land have already been purchased by developers, with the new properties available for sale next year,” said Fan.

The industrial investors may consider increasing their investment in the next year as well, according to Fan.

The economist also pointed out that Chinese investors have become more savvy when it comes to trade and investment; they no longer believe in an abiding bull market.