Xia Bin told a financial forum in Beijing, “Monetary policy need to be further tightened because there is still a lot of liquidity out there." He said the property market is the “biggest swing factor” in the economy this year.
Premier Wen Jiabao, to contain price risk as the world’s third-largest economy rebounds, targeted a 22% reduction in new lending from 2009’s record expansion. He also raised reserve requirements three times this year and intensified a campaign against real estate speculation. Property stocks in Shanghai, 2010’s worst-performing index, plunged 28% against an 18% drop by the benchmark.
Business Week reported that Xia also said the government should guard against rising financial risks in local government borrowings. Xia was appointed in March as one of the three academic advisers to the People’s Bank of China.