Official: 4.5% inflation warning level acceptable in China

11:36, October 18, 2010      

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China's inflation warning level can be raised to 4.5 percent instead of being limited to 3 percent because China can still maintain a 9 percent increase in its economic growth, said Li Yining, deputy director of the Economic Commission under the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC) at Ward Wealth Expo 2010 Saturday.

Li Yining said that if the international oil, iron ore prices and food prices continue to rise, imported inflation would be inevitable.

However, an inflation warning level of 3 percent is applicable in the West. Since China can still maintain a 9 percent economic growth rate, if a 3 percent inflation rate is still seen as the warning level, a lot of problems might be present in the social economy, Li said.

He argues that 4.5 percent rising of inflation can be expected and accepted in China.

China's August consumer price index (CPI) rose by 3.5 percent, hitting a new high in 22 months, and some analysts expected that CPI may create a new record in September.

Li also noted that the current proactive fiscal policy should not be ended rashly in a short term.

"The lessons of 1990s remain firm in our minds. If we now develop in a sharp turn, debt defaults and incomplete or delayed residential projects would appear," Li said. "Deflation could occur. Therefore, we must maintain the current situation and keep a close watch on it and then end the policy appropriately under the right circumstances."

By Zhao Chenyan, People's Daily Online

(Editor:赵晨雁)

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