China should reduce the inflation and the budget deficit

Viliyana Filipova — Sat, 05 Mar 2011 13:53:17 +0000

Fighting the inflation is a key economic priority for China this year because the government aims to limit the risk of social unrest, Prime Minister Wen Jiabao in a speech to the country conditions.
“We can not afford the price increases to affect the normal life of people with low incomes,” said Wen in the report the annual meeting of The Chinese meeting of MPs in Beijing today. “This problem affects the welfare of the people has common interests and concerns social stability.”
The 64-year-old Wen confirmed targets 4 percent inflation for the whole year and 8% growth against attempts by the Communist Party to provide support for the 61-year rule. Over the past two weekends government sent hundreds of police in Beijing and Shanghai after the Internet calls for protests, inspired by bunks in the Middle East and North Africa.
“Inflation has the potential to trigger social unrest,” said Liu Li-Gang, an economist at Australia & New Zealand Banking Group in Hong Kong. The government should increase interest rates on loans and deposits by 0.75 percentage points by year’s end, and to raise wages and to grant aid the poor, he said.
Among the major problems of society Wen highlighted the illegal seizures of land, food safety, “excessive” increases in housing prices and “massive corruption” in some places. The government will oppose inflation “decisively” and would turn it into a “top priority for macroeconomic control,” the Chinese premier.
Lower budget deficit
The budget deficit may be 900 billion yuan (137 billion dollars) in 2011, or 2% of GDP by 150 billion yuan less than the target for 2010, said Wen Jiabao. He confirmed that the country supports “proactive” fiscal policy and “prudent” monetary policy. Yesterday the Shanghai Composite index rose to a four-peak because of investor expectations for measures to support consumption. The Chinese government plans to reduce dependence on exports and investment and strengthen consumer spending – a move that could help reduce global economic imbalances blamed for financial crisis.
“Increasing the domestic demand is a long term strategic basis,” said Prime Minister in the report. The granting of subsidies for urban population with low incomes and for farmers and conservation incentives for the purchase of household appliances in rural areas will contribute to increased costs, he said. The government also provides support for private investment. To control inflation, the government will manage liquidity to ensure agricultural production and will resort to price controls when required, said Wen Jiabao. According to him, state officials will limit speculation in real estate and will “adjust and improve the” fiscal policies in the property.
“The main challenge to control inflation bubble in property prices that comes from too free cash terms to the price of assets,” said economists days ago in a report from China International Capital Corp. Ltd.

Greece launches 10-year bonds with high yield

Viliyana Filipova — Thu, 04 Mar 2010 18:55:01 +0000

Greece began with sales of ten-year bonds yesterday after the country has announced plans to significantly cut costs in order to reduce the budget deficit. This government is seeking to win back investor confidence, which drew aside from the financial markets in the country. It is expected that the price of bonds to be such as to bring a serious return to investors, as it is projected to amount to approximately 6,5 per cent, Bloomberg reported before familiar with the situation requested anonymity. For comparison, the yield of the current issue, which is due in July 2019 proposes return of 6,1 per cent. Because of the planned auction price of the instruments, allowing investors to protect the bankruptcy of Greece have risen for the first time in a week. Swaps for bankruptcy protection today to deal with 11 basis points more expensive. Among the measures to combat the deficit were increases in excise duties on tobacco and alcohol restriction on wages in the public sector and others. The plan is the budget deficit, which currently amount to 12,7 percent, to be shrunk to about 4 per cent at the end of the year.
The Greek government must sell bonds for 53 billion euros this year to cover their needs for funding, the agency added.

Financial Communique » budget deficit

China should reduce the inflation and the budget deficit

Greece launches 10-year bonds with high yield