China's rising inflation rate, however, was not expected to ease for March or the entire first quarter. Inflation figures are to be released in mid-April. The consumer price index rose to nearly a 12-year high of 7.1 percent and 8.7 percent in January and February, respectively.

The government would have to address three issues: imbalances between domestic and external demand, mounting energy and environmental pressures and widening urban-rural income gaps, in order to achieve an economic soft landing this year, said Zhuang Jian, a senior economist with the Asian Development Bank mission in China.

"China needs to focus on expanding domestic consumption to avoid an economic fall-off," Zhuang said.

However, economists also agreed that the driving forces of China's economy, like investment and consumption, would remain robust this year despite the slowdown.

"The overall steady economic situation would offer much 'flexibility' for the country to coordinate its tight monetary policy and prudent fiscal policy," Kuijs said.

China's actions so far

China said it would try to keep its economic growth at 8 percent with inflation at about 4.8 percent this year, according to targets set by the cabinet, or State Council.

The People's Bank of China (PBOC), the central bank, said late last month that the country would maintain its tight monetary policy, which would be adjusted in response to changes in the domestic and world economies.

The central bank raised the bank reserve requirement ratio twice so far this year. It also drained 3.6 trillion yuan (514.3 billion U.S. dollars) in open market operations in the first quarter, in an apparent drive to absorb excess liquidity.

The government would continue to improve macro controls with a prudent fiscal policy, a tight monetary policy and efforts to curb rising prices, the State Council said in its latest bulletin on key tasks for 2008.

It also pledged to increase investment in agriculture, boost economic restructuring and improve people's living standards.

The country had also rolled out a series of measures to fight inflation after China's government was reshuffled last month. Among the latest such moves were increased farm subsidies to boost production and curb grain price hikes.

(Xinhua News Agency April 3, 2008)