Subject: The Formation of the World Influence of Chinese Economics and the Outlook

Questions:

• The government has taken a slew of measures in the past three years try to slow down some sectors of the economy and the latest steps are focused on the red-hot property sector. Will the new steps be more effective in warding off a property bubble? Do you expect more tightening policies in the pipeline?
• Many Western economists are puzzled by Beijing's reluctance to let the yuan appreciate faster, which the economists argue would be more effective in tackling the problem of excessive liquidity -- the root-cause of the persistent investment overheating and property frenzy (although sizzling money supply has yet to push up consumer inflation too much due partly to government controls over utility prices). Why top policy makers are dragging their feet on the yuan despite the seemingly evident economic benefits ? What are the biggest worries for decision makers that prevent them from freeing up the currency?
• (This is a bit sensitive) PBOC is apparently trying to push more currency flexibility to help free up monetary policy while the Commerce Ministry and Agricultural Ministry are more concerned about the adverse impact of a stronger currency on the weaker fragments on the export-oriented sectors and peasants. Are such concerns justified and how will this kind of policy wrangling, if really exists, decide the pace of the yuan's appreciation in the future?
• Government officials have argued against using the exchange rate solely to reduce the country's trade surplus and pledged to lower the hefty savings rate (now close to 50 percent) by encouraging domestic consumption. To that end, Beijing is expected to raise salaries for millions of civil servants in July while some provinces have already raised minimum wages for workers. How long you do you think China will need to rebalance its trade on condition that the United States and other Asian countries also take concerted actions. Will Beijing allow fiscal policy to play a bigger role in achieving this goal?
• On the policy issue, it's interesting to compare current austerity measures with those adopted in the 1990s, what are the biggest differences in policy formulation mechanism ? Some people have suggested that Chinese policy makers have become more skillful in steering the economy with standard monetary policy levers, rather than resorting to harsh administrative measures, or doing it in a more "scientific" way. Also, the current leadership tends to make economic decisions based on consensus, does this mean economists like you are playing a more important role in policy-making process?
• With growing economic influence, China's every policy change could move global commodity prices and currencies. This certainly requires Chinese leaders to take global impact into consideration when they form key policy decisions (for example, on closely watched currency and interest rates). In reality, do Chinese policy makers care about global impact, or still put domestic interests on top of everything ? How successful is China in getting its message across to the financial markets ? do they need to do more to let U.S. officials/lawmakers to understand the currency regime, for example?