July 20, 2010 (Chinavestor) The Asian Development said China should raise interest rates or allow the Yuan to gain strength in an effort to ward off inflation in the world's fastest growing major economy. Beijing has taken steps to cool rising property prices and keep inflation at bay, including a mandate that required banks to bolster capital reserve and increased down payment requirements for property buyers.
The Asian Development Bank said Beijing's pledge to let the Yuan appreciation may help China battle inflation. China is aiming for GDP growth this year of around 8% while trying to keep inflation to 3%. The People's Bank of China, the country's central bank, has pledged to employ an "easy" monetary policy for the rest of this year.
The Asian Development Bank is estimating China's GDP will grow at a rate of 9.6% this year. Last week, China reported second-quarter GDP growth of 10.3% following first-quarter growth of 11.9%.
China, the world's third-largest economy, should speed up the process of returning economic policies to more normal settings to "avoid excess inflation or a hard landing," the ADB said, according to the Associated Press.
The ADB said South Korea, Malaysia, Singapore, Taiwan, and Thailand should also continue to raise interest rates to fight inflation.