Chinese premier acknowledges "increasing inflationary pressure"
5/3/2008 16:38
Chinese Premier Wen Jiabao admitted today the country is facing
"increasing inflationary pressures" and the task of holding down inflation is
"difficult".
"The current price hikes and increasing inflationary pressures
are the biggest concern of the people," Wen said in his report to the First
Session of the 11th National People's Congress opening in Beijing on
Wednesday.
Last year, China's consumer price index (CPI), a barometer of
inflation, rose by 4.8 percent year-on-year, the highest since 1997 and well
above the government target of 3 percent.
In January, the monthly CPI rose
7.1 percent, a result of price increases during the Chinese Lunar New Year and
the severest winter weather attacking central, southern and eastern China in
five decades.
Price hikes are among the "topics of most concern" that Chinese
netizens hope this year's parliamentary session will address, along with
housing, medicare reform and social security, according to an online survey by
several leading Chinese websites including xinhuanet.com and
sina.com.
Addressing the opening meeting of the parliament, Wen said the
price increases had a great impact on the people's lives, particularly on the
lives of the low-income population.
Pork prices, which had been considered as
the major factor driving up the CPI in the second half of 2007, surged 58.8
percent in January, the National Bureau of Statistics said.
"Because factors
driving prices up are still at work, upward pressure on prices will remain great
this year," he said. "In addition, prices of the means of production have
continued to rise and real estate prices have risen steeply, making the task of
holding down inflation difficult."
He said the country would maintain this
year's CPI rise around 4.8 percent.
Prof. Wei Jie of Beijing's Qinghua
University takes the high CPI rise as a warning that the country must shift its
mode of economic development within two to three years.
"We must shift from
the old practice of relying on investment and exports for economic growth, and
further expand domestic demand and consumption instead," said Wei, a professor
of business administration.
In the transformation process, the government
should take administrative measures to prevent excessive price hikes and
properly settle consequent social issues and various problems concerning the
livelihood of the people, Wei said.
"Government interim intervention and
subsidies for those in poverty, for example, have helped check price hikes of
consumer goods and ease the burden on the disadvantaged group," he said in an
exclusive interview with Xinhua.
Wei said the country should maintain 6
percent to 8 percent of GDP growth to avoid overheating.
Last year, however,
China's GDP grew 11.4 percent year-on-year to 24.6619 trillion yuan (3.43
trillion US dollars), with higher risks of spiraling inflation and economic
overheating.
China's annual CPI rise averaged 2.1 percent between 2003 and
2006.
The year-on-year CPI rise exceeded 6 percent for the first time in
August 2007 and then for five consecutive months.
Xinhua
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