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Senior IMF official urges China to keep tight monetary policy
By Wang Yanlin |
September 16, 2011, Friday
|
Online Edition
Online Edition
China should continue its monetary tightening policy to contain inflation as price rises will be a long-term phenomenon in the country, Chinese economist and deputy managing director of the International Monetary Fund Zhu Min said today.
"China is now at a turning point of economic growth. If we look into the history of Japan and South Korea, a long period of inflation will follow this stage of economic development," Zhu said in a broadcast interview with sina.com at the Summer Davos forum in Dalian, Liaoning Province.
The inflow of global liquidity, rising prices of commodities around the world and more expensive labor costs at home will contribute to exert inflationary pressure in China, Zhu said.
"But China should also observe subtle policy changes in other countries," Zhu added. "Against the background of a possible global economic recession, China should keep its own growth at a healthy level by making policies flexible."
China's inflation rate has hovered at a high level since the beginning of this year. The Consumer Price Index, a key gauge of inflation, expanded 6.2 percent from a year earlier last month after hitting a 37-month high of 6.5 percent in July.
Between January and August, China's consumer prices jumped 5.6 percent year on year, surpassing the country's target of controlling it under 4 percent in each of the first eight months.
The Asian Development Bank raised its projection of China's inflation this year to 5.3 percent on Wednesday from a previous estimate of 4.6 percent made in April.
The bank also slashed its forecast for China's economic growth rate for this year to 9.3 percent from 9.6 percent because of weak global demand.
But Zhu said the world economy may be able to avert a dreaded double-dip recession if governments could enact proper policies to rebalance their economies. Developing countries needed to stimulate domestic demand while rich countries should boost investment, Zhu said.
"China is now at a turning point of economic growth. If we look into the history of Japan and South Korea, a long period of inflation will follow this stage of economic development," Zhu said in a broadcast interview with sina.com at the Summer Davos forum in Dalian, Liaoning Province.
The inflow of global liquidity, rising prices of commodities around the world and more expensive labor costs at home will contribute to exert inflationary pressure in China, Zhu said.
"But China should also observe subtle policy changes in other countries," Zhu added. "Against the background of a possible global economic recession, China should keep its own growth at a healthy level by making policies flexible."
China's inflation rate has hovered at a high level since the beginning of this year. The Consumer Price Index, a key gauge of inflation, expanded 6.2 percent from a year earlier last month after hitting a 37-month high of 6.5 percent in July.
Between January and August, China's consumer prices jumped 5.6 percent year on year, surpassing the country's target of controlling it under 4 percent in each of the first eight months.
The Asian Development Bank raised its projection of China's inflation this year to 5.3 percent on Wednesday from a previous estimate of 4.6 percent made in April.
The bank also slashed its forecast for China's economic growth rate for this year to 9.3 percent from 9.6 percent because of weak global demand.
But Zhu said the world economy may be able to avert a dreaded double-dip recession if governments could enact proper policies to rebalance their economies. Developing countries needed to stimulate domestic demand while rich countries should boost investment, Zhu said.
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