The National People’s Congress meeting reveals that the Chinese leadership, despite the successes of 2009, feel hemmed in by the economic challenges and dilemmas that face them. Economic policy-makers see themselves as having very little room for maneuver. While monetary policy must reduce excess liquidity in the system, it cannot shift to a sharply contractionary stance. Given the difficulties policy-makers are encountering, they are increasingly stressing administrative measures to achieve their objectives.

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