Imported inflation risk high
INFLATION in China may have peaked in July but a possible monetary stimulus in the United States may bring on new "imported" inflationary risks to China, the National Development and Reform Commission said yesterday.
China's top economic planning agency expects inflation in China to be mild and under control in the second half of this year.
Food prices will still be high but prices overall will fall.
"Measures to boost supply and to control prices on the market are taking effect," the NDRC said on its website yesterday. "Prices of agricultural products and construction materials are stabilizing, and imported inflation is weakening after commodity prices fell globally."
"We will control inflation as a priority and continue to increase supply of crops, pork and vegetable so as to stabilize food prices," it said.
However, the NDRC warned of a big possibility that the US may unveil a third round of quantitative easing, or printing money, to repay debt and boost economic growth, which may push up prices of commodities globally and increase pressure of imported inflation.
The US's easy monetary policy may also trigger an influx of more speculative money into China and make it more difficult for the government to stabilize prices, it said.
Its comments came hours after the Federal Reserve vowed to keep interest rates near zero for at least two more years.
A Reuters poll of dealers on Tuesday found that 37.5 percent of respondents expected the Fed to resume buying bonds within the next six months, up from 27.5 percent who had expected the move when they were polled on Friday.
Analysts predict China will face a bigger challenge in curbing inflation and ensuring economic growth.
Lian Ping, chief economist at the Bank of Communications, urged the People's Bank of China to conduct more open market operations to withdraw liquidity instead of raising interest rates, and Teng Tai, chief economist at Minsheng Securities, called for a more flexible yuan to tame imported inflation.
China's top economic planning agency expects inflation in China to be mild and under control in the second half of this year.
Food prices will still be high but prices overall will fall.
"Measures to boost supply and to control prices on the market are taking effect," the NDRC said on its website yesterday. "Prices of agricultural products and construction materials are stabilizing, and imported inflation is weakening after commodity prices fell globally."
"We will control inflation as a priority and continue to increase supply of crops, pork and vegetable so as to stabilize food prices," it said.
However, the NDRC warned of a big possibility that the US may unveil a third round of quantitative easing, or printing money, to repay debt and boost economic growth, which may push up prices of commodities globally and increase pressure of imported inflation.
The US's easy monetary policy may also trigger an influx of more speculative money into China and make it more difficult for the government to stabilize prices, it said.
Its comments came hours after the Federal Reserve vowed to keep interest rates near zero for at least two more years.
A Reuters poll of dealers on Tuesday found that 37.5 percent of respondents expected the Fed to resume buying bonds within the next six months, up from 27.5 percent who had expected the move when they were polled on Friday.
Analysts predict China will face a bigger challenge in curbing inflation and ensuring economic growth.
Lian Ping, chief economist at the Bank of Communications, urged the People's Bank of China to conduct more open market operations to withdraw liquidity instead of raising interest rates, and Teng Tai, chief economist at Minsheng Securities, called for a more flexible yuan to tame imported inflation.
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