China targets 4-pct inflation rise, price stability top priority (2)

10:14, March 06, 2011      

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To make the situation worse, higher grain prices after adverse weather conditions worldwide, rising oil prices, regional political tensions and turmoil and the quantitative easing policies of the United States will all add price pressures in China.

Zhang Xiaoji, a senior researcher with the Development Research Center of the State Council, forecast China's full-year inflation would be capped under 5 percent this year on the precondition that the world's commodity prices would not continue the steep rise.

Mo Xiaosha, a researcher at the Guangxi Academy of Social Sciences, said although consumer prices were likely to further pick up in the coming five years, the government would not lose control thanks to its policy package.

Seeking to reassure public confidence, Wen said the country has oversupply in major industrial products, ample grain reserves and abundant foreign exchange reserves, which the government will "make the most of" in its fight against inflation.

The government's policy tool-knit will include liquidity management, production boosts and intensified crackdown on price speculations and hoarders.

The premier reaffirmed that China will continue to implement a proactive fiscal policy and prudent monetary policy in 2011.

Wen said the government plans a 16-percent increase in the broad money supply (M2) this year, down from last year's 17-percent target and the actual increase of 19.7 percent.

However, his government work report did not mention this year's annual quota for the new loans, which was included in both 2009 and 2010 reports.

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