China – “biggest economic threat is deflation” – more

The headline in the Shanghai Securities News crossed the wires earlier (here). MNI have more details now:

The China Centre for International Economic Exchanges – a research group affiliated with the National Development and Reform Commission – says China’s biggest economic threat is deflation.

Says the PBOC should therefore improve liquidity management, maintain loose liquidity using tools such as reverse repos and short-term lending facilities

• Says M2 growth should be kept at 13%
• The deposit-reserve ratio should be cut
• A stable exchange rate maintained
• And the government should expand the fiscal deficit and cut taxes more