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December 14, 2009

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Bank urges battle over inflation

CHINA should take more forward looking and preemptive measures to fight inflation expectations following this year's credit boom and runaway property prices, said a report released by a Chinese bank.

Bank loans should be extended at a more reasonable pace with improved structures next year and policy fine-tuning is necessary, the Bank of Communications said in a report released by its financial research center.

The government should continue its monetary policy and also be more targeted and flexible, it said.

The report noted soaring equity and property markets are always a prelude to inflation. Money flows should be regulated to prevent asset bubbles, it said.

The report also suggested the government increase supply of land resources and affordable housing and crack down on land enclosure to curb skyrocketing property prices which gained the most in 14 months in November.

The consumer price index, the main gauge of inflation, gained 0.6 percent in November from a year ago, the first monthly rise since January.

The producer price index, a major measure of wholesale inflation, fell 2.1 percent in November from a year ago.


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