Price stability stays top priority

PUBLISHED : Saturday, 23 July, 2011, 12:00am
UPDATED : Saturday, 23 July, 2011, 12:00am


Maintaining stable prices and controlling the mainland's property market will remain a top priority for the central government in the second half of this year, the Communist Party's top ruling body said yesterday after a policymaking meeting.

The government will keep the overall direction of economic policy unchanged in the second half of the year, according to a statement issued after a Politburo meeting and reported on China Central Television.

The Politburo pledged to speed up the construction of affordable housing, and to curb the overly rapid rise in property prices.

The statement likely signals that no immediate relaxation will take place in Beijing's existing policy on the market, despite widespread anticipation of such changes amid concerns of a slowdown in the world's second-largest economy.

The meeting also decided that the decision-making Central Committee would convene in Beijing in October.

In a meeting on Thursday, President Hu Jintao (pictured) and Premier Wen Jiabao both said the government would continue to implement its 'prudent' monetary policy and pro-active fiscal policy in the second half of this year.

Hu and Wen met the non-communist parties and the All-China Federation of Industry and Commerce, as well as those without party affiliations who attended the event, Xinhua said.

Wen reiterated that the government would stick to its current macroeconomic policies. 'The overall direction of macroeconomic policy must not change,' he said, adding such policies would be more forward-looking and flexible to ensure the easing of inflation, as well as to avoid big 'fluctuations', or downward adjustment, in the economy.

He warned there were many instabilities and uncertainties to be faced as 'the world economic recovery remains fragile and unbalanced'.

The latest data from the National Bureau of Statistics said the mainland's consumer price index rose 6.4 per cent in June, up from 5.5 per cent in May and well above the government's annual target of 4 per cent.

But there are growing calls from regional governments and business for Beijing to relax its tightening policy, with the argument being that despite last month's three-year-high consumer inflation rate, there are increasing signs of slow growth.

Inflation has become a major concern for policymakers, who worry that price hikes could fuel discontent among millions of ordinary Chinese.

Meanwhile, Zhou Wangjun, vice director the National Development and Reform Commission's Department of Price, said yesterday the current round of inflation would peak, or 'approach a turning point'. He was 'cautiously optimistic' about consumer inflation in the second half of the year.

Zhou said the government would keep price rises at suitable levels to maintain growth. 'If the economy grows 10 per cent, then a 3 per cent to 5 per cent inflation level is acceptable,' he said.