China lowers 2013 inflation target to 3.5%
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E-mail Xinhua, March 5, 2013
China aims to hold this year's consumer price growth to around 3.5 percent, 0.5 percentage point lower than the inflation target set for 2012, Premier Wen Jiabao said in a government work report Tuesday. [More about Wen's government work report]
"China is still under considerable inflationary pressure this year, and maintaining basic stability of overall prices has always been an important macro-control target," Wen said at the opening of the First Session of the 12th National People's Congress (NPC), the country's top legislature.
There is upward pressure on the prices of land, labor, agricultural products and services. Meanwhile, "China is facing imported inflationary pressure resulting from easy monetary policies in major developed countries," the premier said.
Wen said the inflation target is set to leave room for adjusting the prices of energy and resources, and is in consideration of the carry-over effect of consumer price rise in 2012, which will contribute about one percentage point to this year's inflation rate.
To keep overall prices stable, the government "shall ensure the supply of major commodities, boost distribution of goods, reduce logistics costs, and tighten oversight over market prices," said Wen.
China will continue to implement a proactive fiscal policy and a prudent monetary policy this year, he added.
The country's actual consumer price index (CPI), a main gauge of inflation, dropped to 2.6 percent in 2012 from 5.4 percent in 2011.
Wen attributed last year's inflation drop to the government's efforts in controlling prices and the overall economic performance as well.
Experts say the 3.5 percent inflation target indicates that China's policy-makers remain optimistic about this year's consumer prices.
Yi Gang, deputy governor of the People's Bank of China (PBOC), the central bank, predicted on Monday that China will see a consumer price rise of about 3 percent this year. He said this year's inflation would remain in a "controllable spectrum".
Yang Ziqiang, governor of PBOC's Jinan Branch in Shandong Province, said the rise in prices remains "mild", noting that multiple factors such as imported inflation and price rises of labor and resources are to blame.
Others, however, think differently.
Tang Yilin, deputy chairman of Shandong Federation of Industry & Commerce, said excessive amount of currency issued into circulation has pushed up the prices.
"It is essential for the government to administer the currency issuance to keep the inflation in check," said Tang, also an NPC deputy.
In an interview with Xinhua, Peter Fung, chairman of KPMG Global China Practice, said high inflation might be one of the major risks for China's economy in 2013.
The rapidly rising prices will worsen the monetary environment, which will dampen the country's economic growth this year. China's GDP growth in 2012 is 7.8 percent.
Residents have already felt the pinch from rising prices, especially in regards to food and housing.
China announced last week a rise in its retail prices of gasoline and diesel, a move experts warned will eventually translate into consumer prices hike and build up inflation pressure.
Fang Li, a resident from Jinan, provincial capital of Shandong, complained that the prices of daily necessities like milk and chicken have already on the rise.
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