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Inflation pressure reflects 'Chinese characteristic' in economic growth
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In February, the CPI rose to a decade record monthly high by 8.7 percent, a result of price increases during the Chinese Lunar New Year and after the severest winter weather hitting central, southern and eastern China in five decades.

Like farmers, China's central bank was also pushed to the front line in checking inflation. The People's Bank of China has pledged to continue its tight monetary policy this year.

After the entry of the World Trade Organization, China saw a big increase in foreign trade, which led to the expansion of its foreign exchange reserve. While exchanging foreign currencies in the domestic market with Renminbi, the central bank, to avoid over-supply of the currency which incurs inflation, had to take measures so as to reduce fluidity of money.

The central bank raised the reserve ratio 10 times and interest rates six times to soak up liquidity last year. The reserve ratio has so far been raised once in 2008.

But room for the adjustment is limited because of globalization, especially after the subprime loan crisis in the United States, noted Zhou Xiaochuan, governor of the People's Bank of China.

"Inter-reliance of interest rates between nations is growing, which is a challenge to China," he said.

Experts believe that China will face heavy pressure of inflation fuelled by growing costs from all aspects for a medium or long period.

According to Wang Yiming, an expert from the National Development and Reform Commission, as China's import of crude oil and raw material soars, high international oil prices and surging iron ore costs will further aggravate the situation.

"Besides, the newly decreed labor contract law boosted China's labor cost," he said.

As China stresses social security, environmental protection and energy saving in recent years, Xu Shanda, former vice director of the State Administration of Taxation and political advisor, believed that more policies to be implemented addressing these issues would force up the cost in some enterprises.

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