BEIJING, Oct. 22 (UPI) -- A leading Chinese banker warns that without immediate corrective steps, China's huge stimulus measures could create bubbles in the equity and property markets.
Writing in the Financial Times, Qin Xiao, chairman of China Merchants Bank, says the country needs urgent monetary policy tightening even at the risk of a moderate economic slowdown.
"Monetary policy must not neglect asset-price movements," he wrote in the Times. "Therefore, it is urgent that China shifts from a loose monetary policy stance to a neutral one."
Qin's warning came a day before the National Bureau of Statistics announced the third quarter economy grew a sharp 8.9 percent year-on-year and that China is on track to achieve the targeted full-year growth of 8 percent.
The massive stimulus measures introduced this year included a $586 billion spending package, more than twice that amount in bank lending, tax cuts and consumer subsidies.
The Times said according to its calculations and those by independent economists, China's stimulus measures could amount to 15 percent to 17 percent of this year's GDP if the bank lending of $1.2 trillion is taken into account.
Some critics have warned the investments could trigger inflation and that excessive bank lending could cause sharp rises in equity share and property prices.
Nomura International economic Tomo Kinoshita says China risks creating an asset bubble similar to Japan's in the 1980s.
