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According to the Chinese National Bureau of Statistics the comfort zone of inflation level is around 2% to 4%. When the inflation is below2%, the insufficiency of inflation momentum may cause an economy stagnant, such as Japan. When the inflation is above 4%, the Chinese government will face the condemnation of people. Thus, although the issue of excess liquidity is severely influencing the inflation, the current inflation rate is 5.4% (slightly above 4%) implies an impracticality of demand control. This is because the traditional Chinese saving behavior offsets the strong inflation impact of excess liquidity. Besides, the huge polarization of rich and poor causes a disaccord in purchasing power increment between the rural area and urban area Therefore, the impracticality of fiscal contraction is embodied from the high probability of destroying both benign inflation and malicious inflation
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