China to keep inflation under control despite difficulties
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China would be able to keep its consumer price index (CPI) at round 3 percent this year, despite relatively high inflation expectations, a senior economist said?on Saturday.
Yao Jingyuan, chief economist of the National Bureau of Statistics, said, "China's grain output totaled 1.02 trillion kg last year, representing the sixth straight year of good harvest, which serves as an important stabilizer for prices."
Overcapacity would also prevent prices from rising sharply and quickly, Yao said.
But he also warned the possibility of price rise as the country relied heavily on the international market for bulk commodities such as iron ores and oil. Sharp increase in the prices of these imports were likely to push up other prices.
China's experience in the past 30 years showed that the coexistence of an overheated economy, a crop failure and a credit binge would result in serious inflation, Yao said.
"We should do everything possible to prevent the three factors from occurring together," Yao said.
China's CPI, a main gauge of inflation, rose 2.7 percent year on year in February. It ended nine months of decline in November last year, when it rose 0.6 percent.
