Inflation a threat as growth to slow
Mainland economic growth would moderate to around 9 per cent next year after hitting 10.3 per cent this year, said a senior researcher at a government think tank yesterday while warning of mounting inflationary pressures.
Yu Bin, director of the macroeconomic division of the State Council's Development Research Centre, said consumer prices would rise by about 4 per cent, driven by increasing labour costs, higher commodities prices and growing money supply.
'We will face certain inflationary pressures next year, but severe inflation is rather unlikely,' Yu said.
CCTV last night quoted Zhang Ping, head of the top economic planning agency, the National Development and Reform Commission, as forecasting that GDP next year would grow by about 8 per cent and the consumer price index would be capped at about 4 per cent.
Most economists think the world's second-largest economy will grow at least 9 per cent next year. 'That the central government usually deliberately sets a relatively low growth target is to prevent local governments from becoming over-ambitious,' Yu said.
The forecasts by Zhang and Yu were the first numerical targets for next year to be issued since the central economic work conference, an annual top-level meeting, ended on Sunday.
Yu said Beijing's challenge was to strike a balance between maintaining a relatively high growth rate and curbing inflation. 'The number of jobs to be created by the 9 per cent growth will be sufficient to resolve the unemployment pressure problem.'
The current trend, in which economic growth has lost some steam over the past three quarters, would be reversed after the first quarter of next year, Yu said.
This year, GDP growth slowed from 11.9 per cent year on year in the first quarter to 10.3 per cent in the second quarter, then 9.6 per cent in the third. Since steady growth remained the government's overriding objective for next year, fighting inflation was likely to top the agenda in the first two months.
Authorities have ordered a slew of measures to curb prices and boost supplies of key goods. However, Yu warned that uncertainties remained over the central government's abilities to contain price rises due to 'very complicated' international factors beyond Beijing's control. He blamed the second round of quantitative easing (QE2) in the United States for fuelling 'imported inflation' in production materials bought abroad.
The mainland's consumer price index - a key gauge of inflation - rose 5.1 per cent year on year last month, the most in 28 months and well above the full-year target of 3 per cent.
The slightly higher threshold for inflation in 2011 was consistent with another official media report yesterday that the mainland aimed to cap new loans at about 7.5 trillion yuan (HK$8.76 trillion) next year.
The China Securities Journal also reported that the growth in money supply would be below 16 per cent, slightly lower than this year's 17 per cent. 'In all likelihood, the priority of monetary policy next year will still be protecting growth,' the newspaper said in a front-page report.
