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Inflation is likely to remain high

(China Daily)

08:24, October 24, 2011

BEIJING - Inflation in China in 2011 will stand at 5.8 percent, and there will be no initiatives to further tighten or loosen the nation's monetary stance, said Yu Yongding, a former adviser to the central bank's monetary commission, on Friday.

"Inflation is slowing down gradually. On the whole, inflation is under control ... the Chinese government has been quite successful in controlling it," said Yu, who is currently a researcher at the Chinese Academy of Social Sciences.

Yu made the remarks at a seminar in Beijing, organized by the Central University of Finance and Economics.

China's consumer price index (CPI), a main gauge of inflation, declined to 6.1 percent in September, from a peak of 6.5 percent in July. The government's target for the year is 4 percent.

New moves to tighten or loosen the monetary stance are unlikely, said Yu, adding that China won't cut interest rates until inflation falls below 5 percent.

To soak up liquidity and curb inflation, the government has raised interest rates three times this year and hiked the reserve requirement for commercial lenders six times.

China's economy will perform satisfactorily in the foreseeable future, without the risk of a hard-landing risk in the short- and medium-terms, said Yu.

"Investment growth is still quite strong ... even if the world suffers from a double-dip recession, China can still manage," he said, predicting that the world's second-largest economy will maintain GDP growth of at least 7 or 8 percent.

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