CHINA is confident that it can hold inflation to an average of 4 percent this year, the government’s statistics chief said Thursday, but a central bank adviser warned that soaring commodity costs were adding to upside risks.
Their comments followed a report in a newspaper that new yuan loans were slightly more than 500 billion yuan (US$76.24 billion) in February, considerably less than expected, indicating that the government has scored some success in reining in credit issuance, a crucial part of its campaign to control inflation.
Ma Jiantang, head of the National Bureau of Statistics, told reporters at the country’s annual session of parliament that he was confident the country would hit its goal of 4 percent average inflation, despite upward pressure on prices.
However, Li Daokui, a central bank adviser, was quoted as saying that consumer price inflation could climb to an average 5 percent this year because of surging commodity prices. But that forecast, which is above the consensus of most independent economists, was not backed up by any quotes in the report by China Daily.
In fact, in one comment quoted at length, Li appeared to give a much more benign outlook.
“We still have ample production capacity. If agricultural production is reasonably healthy, and international commodity prices don’t rise too high, it’s likely we can keep inflation below 5 percent,” Li said.
“Core inflation, excluding food and fuel, will be kept well below 3 percent,” he said.
The biggest uncertainty in China’s inflation battle came from afar, said Li, who is also a professor at Qinghua University.
“As the turmoil in North Africa and the Middle East leads to higher and higher crude oil prices, certainly it’s a major concern for China’s economy, because the country has recently imported as much as 55 percent of its oil consumption,” he said. “An oil price of US$120 or US$130 a barrel might be the worst scenario for 2011,” Li said.
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• 17-may-2011 - Re: