China's overheating economy is a direct result of excess liquidity in the US, Yu Xuejun, director of the China Banking Regulatory Commission's Shenzhen Department, told state media. Yu said the easy-money policy in the U.S. from 2001 to 2004 inflated prices globally and pushed up China's foreign reserves, the Wall Street Journal reported. The easy-money policy also drove excessive demand for Chinese assets by foreigners that did not result in matching hikes in consumer prices. Without any control over US policy, China could find it difficult to curtail growth in the money supply.
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