CASS suggests adjusting CPI control target to 4%

17:28, October 13, 2010      

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The Chinese Academy of Social Science (CASS) released its "Autumn Report 2010: Analysis and Forecast of China's Economic Situation" on Oct. 12 and proposed that the central government should not set a low goal for CPI control and should consider raising the regulatory benchmark to about 4 percent.

CASS noted that their proposal would create an easy environment for promoting the reform of resource prices as well as help to increase the income of farmers, digest excessive liquidity, alleviate the pressure on RMB appreciation and improve income distribution.

The report also pointed out that the CPI curve will show an "N" shape in 2010 and 2011, and it is expected to reach its peak in the third quarter of 2010 and start to decline gradually in the fourth quarter. The decline will continue in the first half of 2011, and then the CPI will rise again in the third quarter of 2011.

The country's CPI will increase by 3 percent in 2010, and in 2011, its growth rate will be 3.2 percent, basically equal to that of 2010, predicted the report.

According to the report, insufficient domestic demand will press China's CPI to decline and that the supply and demand structure, in which insufficient demand is a prominent feature, has not fundamentally changed at this time.

Zhang Hanya, a researcher from the Research Institute of Investment under the National Development and Reform Commission, expressed that the fast economic growth will inevitably be accompanied by an inflation of a certain level. Especially, the prices of China's agricultural products are too low, much lower than international prices.

"If we want to increase farmers' incomes, we should not avoid the issue of raising the prices of China's agricultural products," Zhang said. "Furthermore, increasing the wages of residents also requires commodity prices to rise to a certain level."

By People's Daily Online


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