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Quantitative easing measures become China's problem

Quantitative easing measures become China's problem

Quantitative easing in developed countries is harming the economies emerging countries such as China as it faces challenges getting its own macroeconomic settings right, according to the Communist Party mouthpiece People's Daily.

Japan announced monetary measures earlier this month which are designed to enable the unlimited purchase of assets and to keep inflation to 2%, the government's stated target. The United States has also launched a third round of quantitative easing, followed by the European Central Bank's program purchasing of national debs.

Though Japan's government says its spending policy is aimed at reversing deflation, the move is also seen by some as an underhanded way of depreciating the yen so as to boost exports, say analysts.

China should reduce its reliance on exports and further develop domestic demand to safeguard the country's future economic growth, some economists have suggested.

The use of quantitative easing by Japan, the US and others as a means of influencing the currency values could start a global monetary war.

The relatively high returns on investments in developing countries will attract more hot money, appreciating currencies of the countries grappling with inflation, said Sun Lijian, associate dean of economics at Fudan University in Shanghai.

The Chinese government must control inflation to avoid asset bubbles as foreign money flows into the country, experts say.

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