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Is China winning its battle against inflation?


09:15, December 22, 2011

BEIJING, Dec. 21 (Xinhua) -- China's consumer prices have dropped for four consecutive months since peaking this year, somewhat easing consumers' nerves. But the battle against inflation seems far from over.

Wu Shu earns around 6,000 yuan (949 U.S. dollars) a month and doesn't have much leftover after paying rent, buying food and getting clothing. Despite price drops in recent months, he hopes prices will drop more.

"After all, prices have gone up too much in the last two years," he complained.

Wu works in a Beijing-based information technology firm, and quite a few of his colleagues have moved from downtown to the city's suburbs in order to cut rent costs.

According to a blue book published by the Chinese Academy of Social Sciences (CASS), 70 percent of the surveyed Chinese urban and rural residents said they felt the pressure of rising prices has affected their lives over the past year.

Changes in the Consumer Price Index (CPI), a main gauge of inflation, will take the shape of an inverted V this year, but it's still too early for the country to drop its guard against inflation considering the current price level, rising domestic costs and a grim global outlook, analysts said.

The CPI eased to 4.2 percent in November from the year's peak of 6.5 percent in July. It hit 5.5 percent year-on-year during the January-November period, well above the government's full-year target of 4 percent.

"The difficulties in taming inflation will largely come from external situations, which are uncertain and uncontrollable," said Peng Xingyun, a researcher at the Institute of Finance and Banking under the CASS.

The loose monetary policies adopted by developed economies, the debt crises in the EU and the United States, as well as rising global commodity prices have pushed up imported inflation for China and put the country's macro control in an adverse environment, Peng said.

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voyage at 2011-12-22113.210.230.*
control inflation, increase citizens buying power first, economy growth slow down a bit is Ok. Can pick up when the global environment back to normal. Grow internal consumption industries and at the same time , pick up and grow the export market, diversifies the export to the whole world.Economy at certain stage, cannot be grow like a rocket, will bust one day, grow at prudent stage will be more sustainable.

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