China’s think tank alerts gov’t on inflation pressure

Posted on Apr 21, 2011 in AllEconomic News
Experts from the Chinese Academy of Social Sciences (CASS), a major think tank in China, have suggested that the government make taming inflation the top priority for current macro regulations.

The experts said in a blue book on China’s economic prospects released on Wednesday that the country’s commodity prices have continued to rise since May of last year, mainly driven by excessive liquidity, fast economic growth and a feeble agricultural foundation.

In addition, the report also attributed the rising costs of salary, energy, raw materials and land, as well as an international commodity price surge, to the rising consumer price index (CPI).

As long as China maintains an economic growth rate of between 8 to 10 percent, it is possible for the country to rein in the CPI to within 4 percent, it said.

The report also predicted a GDP growth rate of around 9.6 percent for China in 2011, down 0.7 percentage points from the previous year.

The drop might partially be a result of the impact of government policies to tame inflation, it said.

The report, however, noted that despite many uncertainties in this year’s economic development, the country’s economy would continue to maintain a good momentum for development.

China’s central bank announced on Sunday that it would raise the required reserve ratio of the country’s lenders by 50 basis points for the fourth time this year.

The tightening measure had been widely expected after the government said that the CPI, a main gauge of inflation, had reached a 32-month high of 5.4 percent in March.

Alongside reserve hikes, China has also raised benchmark interest rates four times since last October to battle persistent inflation.

via China’s think tank alerts gov’t on inflation pressure – People’s Daily Online.