Wen Jiabao vows to retain "proactive" fiscal stance

China is in a real fix and the experts fear the real estate bubble may attain alarming proportions, if not restrained in time. All these have stimulated the Communist Government of China to get cognizant of each and every development in the pertinent area and the Chinese Premier has come out with a phenomenal assertion. In accordance with Wen Jiabao, the Chinese Premier, from this time forth the government will dampen down property prices, resist pressure for the yuan to appreciate and keep inflation at "reasonable" levels.

"Property prices have risen too quickly in some areas and we should use taxes and loan interest rates to stabilize" them, Wen said yesterday in an online interview with the official Xinhua News Agency. China will "absolutely not yield" to calls for currency gains, he stated in addition.

Take a look at some other crucial facts. Recent reports suggest elucidate that China's property prices climbed last month at the quickest pace ever since July 2008 and all these made industry analysts predict record lending and inflows of money will inflate asset bubbles in the world's fastest-growing major economy. What was the last statement of Fan Gang? Only on November 18 the Central bank adviser said that the nation needs to be on alert for stock, real-estate and commodity bubbles for the reason that global capital flows into emerging economies.

"It's difficult to see how serious the government is about cooling the property market," said Andy Xie, former Morgan Stanley chief Asian economist. "The issue isn't about introducing new measures but enforcing existing measures."

We must focus more on the statement of the Chinese Premier. China should anticipate inflation on account of factors including rising global commodity costs, Wen said, pledging to keep price increases in a "reasonable range." The government will leave no stone unturned to retain a "moderately loose" monetary policy and a "proactive" fiscal stance, Wen said, adding that it would be a mistake to extract stimulus measures too quickly.