A report on the national macro-economy conducted by China’s
Renmin University revealed that the current brisk economy would not
trigger widespread inflation in spite of the great annual growth
achieved in 2007. Instead, the economic momentum next year will ebb
slightly with the expected annual growth rate estimated at
10.5%.
The report concluded that overall demand is roughly balanced
with overall supply, and inflation is being just kept at bay.
Liu Yuanchun, a professor with Renmin University, conducted an
analysis showing how food prices and other staples have sent the
CPI up, seemingly causing the inflation specter to loom. Yet given
the fact that inflation is caused by a host of complicated
parameters, it will not be triggered anytime soon. But he said that
in the long run, structural reforms in the prospective market would
give rise to structural, mild and reasonable price increases.
Liu suggested the macro-economy should implement financial
subsidies as well as a stable pricing mechanism for agricultural
products in lieu of an across-the-board retrenchment policy. The
government should increase their interests moderately to head off
foodstuff price hikes that are considered to be a major indicator
of inflation.
He also added that this year’s economy has reached its zenith
before resuming another cycle, but nevertheless inflation has been
kept at bay. He concluded that, with a balanced demand-supply
relationship, the Chinese economy is still sound and safe.
(China.org.cn by He Shan December 17, 2007)
