Wen confident of keeping inflation, prices in check
Source: Agencies |
December 27, 2010, Monday
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Print Edition
Print Edition
China's government will be able to keep inflation in check, Premier Wen Jiabao said yesterday, the day after the central bank raised interest rates.
He also pledged a speeding up of efforts to rein in house price surges.
The People's Bank of China raised interest rates on Christmas Day for a second time in just over two months as the government strengthened its battle against stubbornly high inflation.
Analysts said the latest rise showed that measures such as increasing banks' required reserve requirements to rein in liquidity were not enough on their own, and that the Chinese authorities were determined to keep inflation under control.
"We have raised the reserve requirement ratio six consecutive times and increased interest rates twice to absorb excess liquidity in the market to keep it at a reasonable level to support economic development," Wen said in a state radio broadcast yesterday.
"I believe we can keep prices at a reasonable level through our efforts. As a major leader of the government, I have the responsibility and I have the confidence, too," he said.
The rate rise came after the government said earlier in December that it was switching to a "prudent" monetary policy, from its earlier "moderately loose" stance.
"Inflationary expectation is worse than inflation itself," Wen said in the broadcast.
"When there is inflation, we must establish confidence, know our vantage points and take forceful and decisive measures in a timely manner to curb price rises," he told listeners.
Inflation jumped to 5.1 percent in November, a 28-month high, despite a crackdown on speculation and repeated moves to curb a flood of money circulating in the economy from massive stimulus spending and bank lending.
Wen pledged to focus more efforts on easing home prices, acknowledging that measures taken this year had not been well implemented.
China intensified its property tightening measures in April and September in an attempt to slow soaring property prices.
Property transactions as well as land costs, a major contributor to high housing prices, have shown signs of a rebound in recent weeks, triggering concerns of more tightening.
"Until now, the measures are not implemented well enough, and we will reinforce our efforts," Wen said.
"In an interview last year, I had promised to maintain housing prices at a reasonable level in my term. I will not hold back but continue working hard to realize this goal," he said.
Responding to a listener's complaint about rising prices, Wen said: "Your words hurt my heart. Indeed, in recent times prices have risen across the nation, and under these circumstances, the lives of middle and low-income earners are evidently more difficult."
Wen said the government will increase the supply of affordable houses for low-income earners.
This year about 3.7 million such apartments have been built nationwide and in 2011 the government will start building 10 million more apartments for low-income groups, he said.
China will also try to curb speculation in the property market, mainly through control on credit and land use, he said.
Wen said people should understand that not everyone can own a house given China's population and the limited land available.
Some university graduates who have just begun to work and some migrant farmers working in cities can rent an apartment first, he said.
He also pledged a speeding up of efforts to rein in house price surges.
The People's Bank of China raised interest rates on Christmas Day for a second time in just over two months as the government strengthened its battle against stubbornly high inflation.
Analysts said the latest rise showed that measures such as increasing banks' required reserve requirements to rein in liquidity were not enough on their own, and that the Chinese authorities were determined to keep inflation under control.
"We have raised the reserve requirement ratio six consecutive times and increased interest rates twice to absorb excess liquidity in the market to keep it at a reasonable level to support economic development," Wen said in a state radio broadcast yesterday.
"I believe we can keep prices at a reasonable level through our efforts. As a major leader of the government, I have the responsibility and I have the confidence, too," he said.
The rate rise came after the government said earlier in December that it was switching to a "prudent" monetary policy, from its earlier "moderately loose" stance.
"Inflationary expectation is worse than inflation itself," Wen said in the broadcast.
"When there is inflation, we must establish confidence, know our vantage points and take forceful and decisive measures in a timely manner to curb price rises," he told listeners.
Inflation jumped to 5.1 percent in November, a 28-month high, despite a crackdown on speculation and repeated moves to curb a flood of money circulating in the economy from massive stimulus spending and bank lending.
Wen pledged to focus more efforts on easing home prices, acknowledging that measures taken this year had not been well implemented.
China intensified its property tightening measures in April and September in an attempt to slow soaring property prices.
Property transactions as well as land costs, a major contributor to high housing prices, have shown signs of a rebound in recent weeks, triggering concerns of more tightening.
"Until now, the measures are not implemented well enough, and we will reinforce our efforts," Wen said.
"In an interview last year, I had promised to maintain housing prices at a reasonable level in my term. I will not hold back but continue working hard to realize this goal," he said.
Responding to a listener's complaint about rising prices, Wen said: "Your words hurt my heart. Indeed, in recent times prices have risen across the nation, and under these circumstances, the lives of middle and low-income earners are evidently more difficult."
Wen said the government will increase the supply of affordable houses for low-income earners.
This year about 3.7 million such apartments have been built nationwide and in 2011 the government will start building 10 million more apartments for low-income groups, he said.
China will also try to curb speculation in the property market, mainly through control on credit and land use, he said.
Wen said people should understand that not everyone can own a house given China's population and the limited land available.
Some university graduates who have just begun to work and some migrant farmers working in cities can rent an apartment first, he said.
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