China's 2010 CPI growth to be less than 5 percent: survey

09:59, May 12, 2010      

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Public concern has been aroused by questions such as whether or not China is suffering from inflation and how to curb it if so. Most economists are relatively optimistic that China's CPI growth will probably be limited to 5 percent in 2010, and the CPI will determine the degree of inflation, reported the Shanghai Securities News after interviewing 10 Chinese economists about the current economic situation.

Most economists still worry that inflation may continue to be overstated, though it still takes some time to draw a conclusion. They believe that inflation is now moderate and controllable, and China will not suffer from serious inflation at least in 2010. However, a few economists believe that there is no inflation in China at present because China's economy already has excess capacity and is facing the risk of a double-dip recession.

China will raise the reserve ratio for banks by at least 0.5 percentage points in 2010, which will probably break the historic record of 17.5 percent, said many economists such as Zhang Ping, deputy director of the Institute of Economics under the Chinese Academy of Social Sciences, Ba Shusong, deputy director of the Institute of Financial Research under the Development Research Center of the State Council, and Zuo Xiaolei, chief economist at Galaxy Securities.

Zhu Baoliang, chief economist at the State Information Center, also believes that since the current monetary policy is relatively loose in view of the economic growth, it would be better to adopt quantitative methods, and there is still some room to raise the reserve ratio.

However, Zhao Xijun, associate dean of the School of Finance at Renmin University, said that China should adapt itself to circumstances. This view is shared by Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance.

Xu Hongcai, a researcher at the China Center for International Economic Exchanges, said that because the main purpose of raising the reserve ratio is to curb asset bubbles, it would be better to take a wait-and-see approach.

Adjusting interest rates is another effective tool in addition to adjusting the reserve ratio. Most economists believe that the interest rate will not rise in the first half of 2010, and the rise in interest rates should be based upon specific circumstances. Li Xuesong, deputy director of the Institute of Quantitative and Technical Economics under the Chinese Academy of Social Sciences, said that the interest rate may be raised in June 2010, but it still depends on specific circumstances. He stressed that the interest rate should be adjusted with great care. However, Zhang Ping believes that the interest rate is likely to be raised in the fourth quarter.

By People's Daily Online


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