China remains focused on inflation

Monday, 21 March 2011 00:01 - - {{hitsCtrl.values.hits}}

(Reuters) - China will stay focused on stifling inflation even as global economic uncertainties multiply, Chinese Vice Premier Li Keqiang said on Sunday.

“We will make stabilising the overall level of prices the primary task of macro-economic adjustment,” said Li, who is likely to succeed Wen Jiabao as premier two years from now.

Li’s comments to a forum of officials and business executives were consistent with recent statements by leaders steering the world’s second-biggest economy. But he underscored how China remains focused on dousing price pressures, even after the growth uncertainties stemming from Japan’s quake-battered economy.

China’s top leaders have repeatedly said their most important task this year is controlling inflation. So far, complaints about rising prices have amounted to little more than grumbles, but serious inflation has sparked social unrest in China in the past.

With a goal of keeping inflation to a 4 percent average this year, the government has raised interest rates three times and banks’ reserve requirements six times since October, most recently on Friday. It has also used a series of direct controls to cap price rises.

Li gave no hint that Beijing considers the job done. He also said the government had to keep balancing growth needs against inflationary expectations.

“Although the global economy is slowly recovering, the basis for recovery is unsteady and conditions are unclear. Global liquidity has increased markedly and the prices of major commodities have risen sharply,” he told the China Development Forum in Beijing.

“Domestically, there is a confluence of imported inflation and structural price rises,” he said.

On March 14, Chinese Premier Wen Jiabao also laid some of the blame for his country’s price pressures at the door of other major economies.

Oil costs were soaring after the tumult across the Middle East, and rich countries pursuing loose monetary policies were also culprits, Wen said, in a thinly veiled swipe at the United States.