Wen Jiabao

Beijing torn over inflation and growth

PUBLISHED : Tuesday, 12 July, 2011, 12:00am
UPDATED : Tuesday, 12 July, 2011, 12:00am


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Premier Wen Jiabao and central bank governor Zhou Xiaochuan have reiterated Beijing's determination to check inflation - but many analysts say this is unlikey to mean more tightening measures as the balance of risks may have already shifted to growth from inflation.

Inflation rose to a three-year high of 6.4 per cent in June, data showed at the weekend.

Wen said the government would maintain the current direction of its macroeconomic policy, keeping price stability as the main objective. But he also said it would 'grasp the direction, strength and rhythm of its macroeconomic policies' as the economic picture gets 'complicated' by uncertain factors.

Wen and Zhou's comments are aimed at showing the battle against inflation is not over. But as tightening measures cool economic activity in various sectors, many regional officials and economists have voiced opposition to them, leaving analysts divided on whether there will be any changes to the measures in place.

Inflation on the mainland is being largely driven by escalating food costs, which were up 14.4 per cent in the year through June.