China targets 4-pct inflation rise, price stability top priority (3)

10:14, March 06, 2011      

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To mop up the excess cash in the economy that helped fuel inflation, China's central bank has raised the reserve requirement ratio for commercial banks eight times since the start of last year and hiked the benchmark interest rates three times.

"Given the lack of generalized overheating, plus tighter credit conditions, we expect the year-on-year inflation to top up in May, with CPI peaking above 6 percent. It will drop back to 3-4 percent in the second half of the year," Li Wei, a Shanghai-based economist with Standard Chartered Bank, said in an email report to Xinhua.

The tightening measures would inevitably lead to deceleration in economic growth, which Li expected would slow to 8.5 percent this year after 2010's 10.3-percent increase.

China sets its full-year growth target at 8 percent this year, Wen said, warning that the country still faces "an extremely complex situation for development".

To achieve the inflation and economic growth targets, China has to "strike a balance between maintaining steady yet rapid economic development, restructuring the economy and managing inflation expectations," Wen said.

The government also swears "resolute" curbs on excessive home price gains, intensified efforts to narrow income gaps and clampdown on corruption.
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