China as a member of the emerging economies, are facing with the current situation in most emerging countries, which face currency appreciation, asset bubbles and inflation pressure, tightening of monetary policy more toward the road. October-than-expected rate hike, is also reflected in the current international and domestic context, the Chinese monetary policy is gradually return to normal, hot money inflows and inflation pressure of economic slowdown than more serious.

Developed further in the current context of quantitative easing, hot money will continue flowing into China, while China’s inflation pressure will further increase, monetary policy tightening will become inevitable. Taking into account the October CPI will likely reach a new high of 4%, the market remains higher inflation expectations, in November once the central bank may raise interest rates, increased 25 basis points. Meanwhile, he expects monetary authorities will strengthen the monitoring of hot money inflows of capital control measures.

For the Fed “release on” whether the action will intensify China’s future inflation, economists said Ye Tan, do not rule out the future there will be more severe inflation situation. If there is a small interest rate hike or a small revaluation of RMB, while capital and release, will aggravate inflation. The only way is the first capital stuck, and then take the domestic interest rate policy, the overheating of the economy is expected to continue to suppress and stabilize the domestic currency market.

In addition, the World Bank in the latest release of “China Quarterly Update,” also pointed out that China’s overall inflation rate rose sharply unlikely phenomenon, but also need to raise interest rates further. The report holds that China’s economy has been close to full capacity level of operation, growth prospects are very good, so need to further tighten monetary policy.

However, the central bank into the possibility of rate hike cycle is relatively small, to take administrative control of the number of tools and methods is a major, does not rule out negative interest rates when the external evaluation of the sound is very high, the central bank may raise interest rates by a passive 2 to 3 time to influence market expectations, to curb asset bubbles and speculation.

A new round of the U.S. implementation of the policy of quantitative easing Although the United States is an optimal choice, but for the global economy will have side effects.

A new round of the U.S. policy of quantitative easing may lead to hot money inflows, the Chinese still practice capital controls, the short-term profit-driven capital or difficult to access, or need to take a detour. China will also hedge through the total control to deal with hot money. But he said the pursuit of arbitrage spreads and capital flows, exchange rate appreciation is almost “impossible to defend,” can not be completely eliminated.

The RMB exchange rate issue, the relevant policy should be gradual rather than radical; policy should be dynamically adjusted, can not hope to solve the problem with a single appreciation. Solve the trade imbalance the exchange rate is a policy, but also need to increase domestic demand and increasing labor wages, so that resource prices reflect environmental costs, the export tax rebate and many other policies.

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