By Fu Jing (China Daily)
Updated: 2007-08-21 09:19

Inflation warning

But some economists have warned that China already faces a high risk of inflation because many a factor indicate that the pressure is growing fast.

"We'd better say risks exist and take measures to prevent it from happening," warned Wang Tongsan, director of the Quantitative Economy Institute of the Chinese Academy of Social Sciences, in an article published yesterday.

As a leading drafter of important central governmental policy documents for years, Wang is the second leading economist to send out warning signals. Last week, renowned economist Justin Lin, of Peking University, said China had entered a cycle of high prices.

Factors such as record high investment costs, growing labor costs, increasing consumption demand and price hike in the international market have fueled inflation fears, Wang has written. "All these factors already exist and are putting pressure."

Wang has even said that the government has to intensify its efforts to bring this year's inflation rate below 5 percent, the international benchmark for inflation. The rate in 2005 and 2006 was 1.8 percent and 1.5 percent, but it climbed to 3.5 percent in the first seven months of this year.

"We should step up our efforts to prevent inflation in 2008," Wang has written. "Even after pork supply is normalized, other factors could trigger inflation."

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