TO THE POINT: Just after the closure of this year's annual session of the National People's Congress, the central bank honored its commitment to further tightening monetary policy by raising the reserve requirement ratio by 0.5 percentage points to a record high of 15.5 percent. But mainland property prices soared, defying the government's repeated moves to slow the growth rate. Venture capital in China grew rapidly in February and is expected to maintain its robust momentum. Total foreign direct investment in China during the past 30 years has amounted to $2.11 trillion.  By LIU YUNYUN

Punching Liquidity Harder

While the U.S. Federal Reserve is trying by all means to promote liquidity to ease the credit crisis in the United States, the Chinese have done just the opposite.

The People's Bank of China, the central bank, lifted the reserve requirement ratio to 15.5 percent, the highest it has been since the financial measure was adopted in 1984, to curb excessive liquidity and restrain banks' impulse to lend money. The new rate, 0.5 percentage points higher than the previous one, took effect on March 25 and was expected to freeze 200 billion yuan ($28.2 billion).

The Chinese Government feared the overflow of cash might eventually lead to the economic bubble bursting, as liquidity is considered the major reason for property price surges as well as inflation. It was the second time the reserve requirement ratio was increased this year and was the 12th time since the beginning of last year when real estate and stock prices soared and inflation concerns grew.

The central bank said the reserve requirement ratio hikes were "in accordance with the government's requirement to enforce a tightened monetary policy, enhance liquidity management in the banking system and promote reasonable credit growth."

Many individual investors and securities analysts complained about the central bank's relentless money-tightening policies, as the benchmark index in the mainland A-share market plunged below 3,800 points from its all-time high of 6,124 points last October.

Zhou Xiaochuan, Governor of the central bank, said the tightened policies were not directed at the stock market and emphasized that inflationary pressure was one of the key factors in deciding monetary policy. Zhou, who was reelected for a second five-year term starting this year, also said there was further room to raise interest rates, but he gave no details. In the meantime, analysts believe the recent reserve requirement increases have diminished the possibility of further interest rate hikes.

Precious Property

Despite widespread reports on falling house prices and sluggish sales, government statistics have discouraged prospective buyers once again. The National Development and Reform Commission and the National Bureau of Statistics jointly issued a report on February property prices, which indicated that average home prices in 70 large and medium-sized cities soared 10.9 percent in February year on year and that the growth rate was 0.2 percentage points higher than in January.

The average price of new homes rose 11.8 percent on an annual basis after gaining 12.2 percent in January, mostly led by price jumps in second-tier cities. For instance, Urumqi, capital of the Xinjiang Uygur Autonomous Region, was the city with the highest increase. New home prices there jumped 24.2 percent during this period. Ningbo in Zhejiang Province and Haikou in Hainan Province had the second highest increases in new home prices at 18.9 percent.

A number of observers contend that the real estate market has encountered a watershed after three years of buoyant growth, drawing evidence of property developers' promotional efforts and a wait-and-see attitude from prospective buyers.

But the government refused to use the word "watershed" to describe the current real estate market. Qi Ji, Vice Minister of Housing and Urban-Rural Construction, said China is at a rapid development stage and the housing supply falls short of demand. Qi said the supply-and-demand conflict would exist for a longer period of time, which indicated that housing prices would continue to rise.

The government vowed to bring down the housing price growth rate. Currently, real estate industry is considered one of the pillar industries in the mainland. The fact is, if housing prices indeed fell sharply, a financial crisis would inevitably follow. The U.S. subprime mortgage crisis had just shown the tip of the iceberg and fallout that awaits the real estate industry.

The government is now paying more attention to providing affordable homes for middle- and low-income people. Guo Songhai, a real estate analyst, praised the government's good intentions, but said they "must be carried out strictly and not tolerate cheating of any kind," referring to the fact that wealthy people fake low-income paperwork and take advantage of the lower house prices.

Soaring Venture Capital

China, the largest emerging market in the world, has seen an increased flow of venture capital to fund startup businesses.

Statistics from China Venture Consulting Co. Ltd. indicate that venture capital investment here surged to $141 million in February, double the amount in February 2007. The $141 million was invested in 15 deals. Investments in telecom, media and hi-tech sectors reached almost $78.8 million and accounted for 56 percent of the total amount invested.