China to curb inflation, economic slowdown

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The main focus of China's economic policy in the near future will be to prevent inflation and an excessive economic slowdown, said Chen Dongqi, vice-president of the Academy of Macroeconomic Research under the National Development and Reform Commission, the 21st Century Business Herald reported Monday.

Rising costs and market speculation are the two biggest factors behind China's inflationary pressures, Huang Mengfu, chairman of the All-China Federation of Industry and Commerce, said on Nov 25.

He added that inflation is an inevitable outcome of China's economic restructuring. Therefore, moderate and controllable inflation is good for the structural transformation of China's economy, he said.

"China has to keep inflation at around 4 percent," Huang said.

However, whether the central government will raise its inflation-rate tolerance remains unknown. The most discussed issue among the policy-makers is how to strengthen the management of inflation, the newspaper reported, citing a policy-making consultant at the government's think tank.

In addition, China will readjust the proportions of related data when calculating the consumer price index next year. The proportion of expenses on housing, education, medical treatment and communications will be increased, while the proportion of food product expenses will goes down, the report said.

Meanwhile, economists said they believe that it's time to address concerns about the loose monetary policy in effect in China for about two years. On Nov 23, Hu Xiaolian, vice-president of People's Bank of China, said the central bank will guide the monetary credit back to normal levels. Hu did not elaborate on what amount is considered a "normal level".

Xia Bin at the central bank's monetary-policy committee said it will be good for stable economic development and help lessen liquidity if the government limits credit growth to around 15 percent in 2011.

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