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Experts say anti-inflation measures still needed

(PD overseas edition)

16:04, November 02, 2011

Edited and translated by People's Daily Online

Recent signs have shown that the momentum of rapidly rising inflation has been under control, with a drop in inflationary expectations. Industry insiders generally said that a turning point in this year's inflation has been confirmed, and the year-on-year CPI growth is expected to continue to fall.

Reporters from People's Daily interviewed related experts on Oct. 31 about the trend for goods prices in early 2012.

Characteristics of a turning point have been confirmed

Peng Sen, deputy director of the National Development and Reform Commission, recently said that China’s overall inflation has begun dropping since the start of August. The CPI growth rate is expected to remain below 5 percent over the next two months of 2011.

Li Daokui, a member of the monetary policy committee of the People's Bank of China, said during a forum that although China's CPI in 2011 is estimated to reach as high as 5.5 percent, it will perhaps drop to 2.8 percent in 2012.

Lian Ping, chief economist of the Communication Bank of China, agrees with Li. He said, "We estimated in July that China's third-quarter CPI would show a minor turning point in the third quarter, which has now been confirmed. It is estimated that the inflation will continue to show a downward trend in the fourth quarter. It is fully possible that the inflation rate will return to the level of about 3 percent in some months in mid-2012, if various measures against inflation can continuously be adopted and implemented."

International and domestic conditions remain complex

However, Peng noted that China’s economy will still face complex international and domestic conditions. Internationally speaking, global economic recovery suffered a huge setback this year, and is filled with uncertainties. Domestically speaking, certain structural and systemic problems have not been completely solved, the country’s extensive economic growth pattern remains largely unchanged, the industrial structure remains unsound, and environmental and resource issues continue to intensify. Furthermore, the imported inflation pressure caused by excessive liquidity globally has not markedly reduced, and the upswing in resource prices has continued.

Lian said that the above assessment and forecasts for the country’s price level depend on whether it can adhere to current price control measures. This is the time to strengthen rather than to slacken its efforts in further easing inflation and reducing circulation costs, otherwise inflation will rebound quickly. China can keep its price level low next year only by effectively implementing various practical measures.

Monetary policies may be adjusted slightly

The central bank recently said that China's overall economic trend did not change much and the spirit of the current monetary polices will be maintained, but China should also be aware of changes of the international economy and make its monetary policies flexible enough.

Lian said that since China's current economic growth rate has declined to a proper level, and inflation has been effectively controlled, China does not need to launch stimulus policies on a large scale nor loosen its current policies.

Therefore, it is suitable for China to do some slight adjustments while maintaining the overall keynote of the current monetary policies so that the policies could be more flexible. For micro, small, new and strategic enterprises, China should make relatively loose policies, and China should strengthen its investments in the areas such as the Indemnificatory housing and important projects under construction.

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