Wen confident inflation will be tamed
March 15, 2011, Tuesday
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Print Edition
Print Edition
CHINA faces a tough task in finding a balance between creating jobs and cooling inflation, Chinese Premier Wen Jiabao said yesterday.
He said the first six months of this year would be a challenging period, with loose monetary policies in some foreign countries, high global commodity costs and rising wages in China all adding to upward pressure on prices.
However, reiterating that controlling inflation was China's top policy priority this year, Wen said the government would be successful in its efforts.
"I don't want to repeat my words too much. I only want to say that we are confident that we can manage inflation properly," he told a news conference after the conclusion of the annual session of the National People's Congress, which approved China's 2011-2015 development plan.
Wen ruled out allowing a faster rise in its currency to cool surging inflation, saying that the government has to consider the impact on Chinese companies and jobs.
Wen pointed to factors beyond the country's borders as the major cause of inflation. He noted that oil costs were soaring in the wake of unrest in the Middle East and also blamed loose monetary policies in some developed countries.
"The inflation we're experiencing now is in fact international in nature," he said. "Imported inflation is having a big impact on China, and that's something we cannot easily control."
Chinese prices rose 4.9 percent in February, driven by an 11 percent jump in food costs despite government efforts to increase supplies and curb a bank lending boom analysts say is partly to blame.
Wen rejected letting the yuan rise faster against the dollar, a move analysts say could cool prices by making oil and other imports cheaper. China has restrained the yuan's rise since the 2008 global crisis to help exporters compete abroad.
"The appreciation of the Chinese currency should be a gradual process, because we must bear in mind its impact on Chinese businesses and our employment situation," Wen told reporters. "The government has confidence that we will be able to anchor inflation expectations," Wen said.
Chinese prices are being driven partly by global inflation, the premier said. He repeated Chinese complaints about "quantitative easing," the United States Federal Reserve's term for its strategy of trying to push down interest rates and spur growth with multibillion-dollar bond purchases.
"Some countries have pursued quantitative easing and that has caused drastic fluctuations in the exchange rates of some major currencies and in global commodities prices," Wen said.
"Imported inflation has had a big impact on China and is a factor that is not easy to control."
He said the first six months of this year would be a challenging period, with loose monetary policies in some foreign countries, high global commodity costs and rising wages in China all adding to upward pressure on prices.
However, reiterating that controlling inflation was China's top policy priority this year, Wen said the government would be successful in its efforts.
"I don't want to repeat my words too much. I only want to say that we are confident that we can manage inflation properly," he told a news conference after the conclusion of the annual session of the National People's Congress, which approved China's 2011-2015 development plan.
Wen ruled out allowing a faster rise in its currency to cool surging inflation, saying that the government has to consider the impact on Chinese companies and jobs.
Wen pointed to factors beyond the country's borders as the major cause of inflation. He noted that oil costs were soaring in the wake of unrest in the Middle East and also blamed loose monetary policies in some developed countries.
"The inflation we're experiencing now is in fact international in nature," he said. "Imported inflation is having a big impact on China, and that's something we cannot easily control."
Chinese prices rose 4.9 percent in February, driven by an 11 percent jump in food costs despite government efforts to increase supplies and curb a bank lending boom analysts say is partly to blame.
Wen rejected letting the yuan rise faster against the dollar, a move analysts say could cool prices by making oil and other imports cheaper. China has restrained the yuan's rise since the 2008 global crisis to help exporters compete abroad.
"The appreciation of the Chinese currency should be a gradual process, because we must bear in mind its impact on Chinese businesses and our employment situation," Wen told reporters. "The government has confidence that we will be able to anchor inflation expectations," Wen said.
Chinese prices are being driven partly by global inflation, the premier said. He repeated Chinese complaints about "quantitative easing," the United States Federal Reserve's term for its strategy of trying to push down interest rates and spur growth with multibillion-dollar bond purchases.
"Some countries have pursued quantitative easing and that has caused drastic fluctuations in the exchange rates of some major currencies and in global commodities prices," Wen said.
"Imported inflation has had a big impact on China and is a factor that is not easy to control."
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