- CNTV English - CCTV News

Experts expect more tighten measures to tackle inflation

03-05-2011 19:32 BJT Special Report:2011 NPC & CPPCC Sessions |

Watch Video

Play Video

Curbing inflation is a key task for the Chinese government this year. The government aims to keep the inflation within 4 percent. But experts say that won't be easy.

China's consumer prices have been climbing over the past six months. The Consumer Price Index, a major gauge of inflation, rose nearly 5 percent in January. Food prices were a major contributor, surging more than 10 percent.

Experts blame excessive liquidity. Other factors include rising labor costs and commodity prices, and international hot money inflows. There's also the expectation of grain output reduction because of bad weather.

Zuo Xiaolei, Chief Advisor of China Galaxy Securities said "The fundamental reason for inflation is excessive liquidity. The government issued a large quantity of money in the last several years in response to the international financial crisis. But when the economy recovers, excessive liquidity becomes a propelling force to push up inflation."

That's why tightening liquidity is key. China has shifted to a prudent monetary policy stance this year. It raised interest rates three times over the past four months, and hiked the reserve requirement ratio for large commercial banks to 19.5 percent.

And analysts are expecting more to come.

Wang Tao, Chief China Economist of UBS Securities said "For interest rate, we expect at least two more hikes this year. Probably we will see two more hikes even in the first half, for reserve requirement, we see that it can easily be 20 percent."

The government aims to keep the CPI within 4 percent this year. But experts think it will be higher.

Zuo Xiaolei said "Assuming the various policies the government has taken will fully show their effects, we predict the CPI will reach 4.5 percent. But if unforeseeable factors occur, or the policies are not properly implemented, inflation may top 5 percent this year."

Experts say the international oil prices are an uncertain factor in inflation. If the current unrest in the Middle East escalates or spreads, crude oil prices may soar. The cost will ultimately be passed on to domestic consumer prices, and further add to the inflationary pressure in China.

Earlier this year, Premier Wen Jiabao said China is aiming for lower GDP growth of 7 percent over the next five years. Experts say slower growth target stresses quality of economic development, and helping to ease inflation.

Editor:Xiong Qu |Source: CNTV.CN

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program