US money printing is 'to blame' for rising inflation in China
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A senior official Friday laid the blame for the country's rampant inflation at the feet of US quantitative easing policies, which aim to help the US extract itself from its own economic torpor.
"US monetary easing caused 'imported' inflation in China," Yao Jingyuan, chief economist with the National Bureau of Statistics, said at the 2011 China Enterprises Overseas Development Summit held by the Global Times Friday.
"The printing of money in the US sent international basic commodities' prices soaring," said Yao. "As a large commodity-importing country, China was undoubtedly impacted."
Yao said printing money would achieve its intended effect of helping the US out of a troubled economic period, but warned it posed a policy dilemma for China.
"The US economy will recover this year, and its economic growth rate will be faster than last year," Yao said. "This is vital given the US plays an important role in the global economy."
Yao said the country's economy was under control, and that the consumer price index (CPI) was not as high as other BRIC members, with India, Russia and Brazil's CPI soaring to 9 percent, 7 percent and 5 percent respectively.
Analysts said China's overly loose monetary policies had also impacted upon inflation.
"The money supply increased too fast in the past year, leading directly to inflation and asset bubbles," said Xiang Songzuo, deputy director of the International Monetary Institute with the Renmin University of China.
China's money supply (M2) increased 19 percent by the end of September 2010 compared with the same period in 2009, reaching 69.64 trillion yuan ($10 trillion), almost double last year's GDP.
Should the money supply maintain this fast growth, the M2 will exceed two times China's GDP within 10 years, said Xiang.
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