Inflation curbs stay as a top priority

PUBLISHED : Monday, 07 March, 2011, 12:00am
UPDATED : Monday, 07 March, 2011, 12:00am

February's consumer price index will drop from the previous high levels, and prices will remain steady for the rest of the year, according to the mainland's top economic planner.

Speaking at a news conference on the sidelines of the annual legislative meetings in Beijing, Zhang Ping, director of the National Development and Reform Commission, said Beijing's recent measures to curb inflation, including administrative price controls and boosting the supply of basic goods, had already achieved a notable effect.

'We have confidence in our capability to keep prices at a stable level,' said Zhang, who also noted the country's ample grain reserve.

Inflation is among the government's greatest concerns, as Premier Wen Jiabao placed a top priority on curbing it this year in his government work report to lawmakers on Saturday.

The CPI, a major gauge of inflation, rose 4.9 per cent on the mainland in January, compared with a 4.6 per cent increase in December and 5.1 per cent in November - a 28-month high. Soaring food prices were the driving factor.

The government aims to keep average inflation for this year to 4 per cent. It will release the February CPI data later this week.

Li Yining, a leading economic adviser, expressed his concerns over the government's ability to tame inflation.

'We have to say that two very important factors are out of our control,' Li told another news conference, referring to petroleum and the weather. The mainland is the world's largest oil importer, and the price of crude oil on the world market jumped above US$100 per barrel recently amid unrest in the Middle East and North Africa.

Zhang also warned: 'Price regulation still faces pressure and risks, and we should not take it lightly.'

To stabilise prices, he said the government would 'appropriately' control the money supply and bank lending, which have been rising quickly over the past two years.

Zhang said efforts to increase grain supplies, regulate 'market order' as well as provide subsidies to the poor had already had an impact on inflation.

He pledged increased fiscal support for major grain-growing areas to ensure the eighth straight bumper harvest this year. He also called for a continued crackdown on speculative hoardings.

On another issue, Zhang said the government would not repeat the rationing of power supplies to achieve its energy intensity target over the next five years.

Some local governments rationed power supplies to industrial users and even households last year in a desperate push to realise the previous energy intensity target.

Zhang reiterated the government's determination to reduce energy consumption per unit of GDP by 16 per cent by 2015.

At the same news conference, Xu Xianping, Zhang's deputy, said 24 provincial regions had set targets for income growth among residents that would equal or outpace local GDP growth goals during the 2011-15 period.

Five provincial governments had promised to make the increase of people's income greater than local GDP growth, and 19 set the same growth rates for GDP and residents' incomes.

Meanwhile, the central government supported Hong Kong as a centre for offshore yuan trading.

Beijing also supported the idea of Hong Kong consolidating its position as a centre for international business and finance, and its efforts to make the city a centre for international asset management, Xu said.

In July, Beijing allowed banks and individuals to freely trade the currency outside the mainland for the first time by creating the offshore yuan market in Hong Kong. The market has grown massively in recent months.

Clamping down

The CPI rose 4.9 per cent in January, partly due to soaring food prices

The government aims to keep the average inflation for this year to: 4%