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Call to diversify economic policy across nation

CHINA'S policy makers should enhance microeconomic research to guarantee proper stimulus measures in different regions and industries of the world's third largest economy, said a leading economist today.

Li Yining, professor of economics at the Peking University, said there were limitations in carrying out a uniform economic policy in so vast a country as China.

"Macroeconomic policy is the foundation and it should adapt to different conditions in microeconomics," said Li at a forum organized by in Beijing.

Some economists have suggested changing China's current loose monetary policy to curb inflation pressures, while others insist maintaining the policy is necessary to reap its economic fruits.

In Li's opinion, several aspects must be considered before such a decision.

"First, we should study the proportion of the stimulus in the real economy and in capital markets. Second, we should know the amount of funds channeled into companies with real growth potential, instead of big firms which are not short of money. Third, we have to know how much capital is used in places like the central and western part of China, which need huge financial support for future development," Li said.

"In places like central and western China, a looser policy should continue. Liquidity should be boosted in small and medium enterprises, and bank loans should go to industries with potential to expand," Li said.

He added the reality is that banks are still reluctant to lend to small businesses because of higher risks, and liquidity in remote areas in China remains tight. Also, overcapacity in industries like steel and cement does not prevent capital from flowing to these sectors.


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