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The Chief Economist of Australia's BHP Billiton Visit
Date:2010-10-23       From:International Office, Research Department of Academy of Macroeconomic Research, NDRC


On May 20, 2010, Ma Xiaohe, the vice-president of Macroeconomics Research Institute of NDRC met the group lead by Ms Vicky Binns, the chief economist of Australia's BHP Billiton, and had a discussion with them. Song Li, deputy director and institute researcher of Macroeconomics office of Development and Reform Commission; Yang Ping, director of investment office, and Zhou Jinfu, deputy director of Industry office attended the meeting.


President Ma pointed why new policies for real estate caused a substantial decline in housing sales, he said that The State Council issued new policies for real estate called "Gou shi tiao" in April, in order to curb housing prices from both supply and demand side, which already have effects on the market. He stressed that, housing prices were far beyond the stage of economic development in recent years, and exceeded urban residents’ accepting capabilities. As a result, it was timely and correct the central government introduced controlling policies, resolutely curbing irrational demand and increasing the effective supply of housing. Researcher, Song Li indicated that in the short term we could curb housing prices by increasing the supply of affordable housing, but the fundamental solution of this problem relies on the long-term fiscal reform. He believed that current government's policy orientation had been more focused on people’s livelihood, so to speak, political performance’s evaluation indicators have changed greatly. Particularly for cities, cost of living would become an important determinant for city competitiveness. In the short term, the rapid rising housing prices may play a role in boosting the local economy, but in the long term it is detrimental to sustained economic development and livelihood improvements. As current controlling policies’ sustainability and the scope of implementation, Yang Ping regarded it as for the cities that housing prices rising too rapidly, and to solve some cities’ existing problems in real estate market.


On M1 and M2’s trend, President Ma indicated that the central bank set growth target in M1 and M2 in early 2010, and took a series of controlling measures, such as increasing the reserve ratio three times, increasing the window guidance, opening market operations and adding commercial banks’ capital base. Yang Ping believed that this year, government has strict monetary policy guiding level, M2 declined rapidly, expecting to reach the set 17% target, but there are certain difficulties to reach the set M1.


As known, the government are eliminating steel and cement industry’s excess capacity recently. As its effect on BHP Billiton’s sales performance, the guests from Australia said, according to their understanding of the information from Chinese authorities, the new production capacity would be more than the part shutting down, in addition they had established good communication mechanisms with Chinese steel manufacturers, it would be helpful to their understanding of China's market demand, and adjusted production timely.


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