Double-dip recession unlikely in China

Updated: 2011-10-24 14:14


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CPI to continue to ease in Q4

NBS spokesman Sheng Laiyun said on Tuesday it is quite likely that consumer price increase would continue to ease in the last quarter of the year, "but we must remain vigilant as the prices are still at a high level."

Since the beginning of this year, facing the ever rising inflation pressure, China has taken a series of measures to stabilize prices, such as reducing liquidity, boosting supply, improving circulation channels, containing irrational demand while establishing a price control mechanism.

From the consumer prices index figures of previous months, those measures have proven to be quite effective. The consumer price index, a main gauge of inflation, fell for two consecutive months to 6.1 percent in September, from July's 37-month high of 6.5 percent.

Sheng said the country's consumer price hike had been "preliminarily contained" as the growth of the consumer price index had fallen for two consecutive months.

As to the price trend in coming months, Sheng pointed out that there are several favorable factors attributing to the drop of prices, such as moderated economic growth, strain in liquidity, the good autumn grain harvest, weakened carryover effects and a significant drop in international commodity prices.

However, Sheng cautioned that some long-term factors to affect the price hikes will not be brought under control in the short period of time, including the rising cost of raw materials, labor and resources. In addition, as the world liquidity is still excessive, the imported inflation pressure has not completely subsided yet.

The September CPI is still high, but stubborn domestic inflation is expected to continue to ease in coming months as a slowdown in the global economy weighs down demand, said economists.

"Price growth will continue to ease in October, but it will not be a significant decline," said Liu Yuanchun, deputy head of the School of Economics of the Renmin University of China.

Zhang Liqun, a researcher with the Development Research Center of the State Council, also estimated that the good autumn harvest will bring more supplies to ease food prices.

Zhang estimated that for the whole year, China's consumer price will grow by 5 percent from last year, one percentage point higher than the government's target.

"The government has underestimated this year's new price factors, especially the hike in domestic pork prices and international commodities," he said.

Many economists predicted that the nation could see GDP growth of above 9 percent for the whole of this year, compared to 10.4 percent in 2010.

Economist Cao Yuanzheng gave his forecast that CPI for the fourth quarter of this year is expected to drop to about 5.5 percent as the CPI is on a declining trend for the time being. He estimated that the average CPI would be about 5 percent.

The Chinese Academy of Social Sciences (CASS), a major government think tank, cut China's growth estimate for 2011 to 9.4 percent from a previous forecast of 9.6 percent.

The CPI is estimated to stand at 5.5 percent for the year, and will further ease to 4.6 percent in 2012, the think tank predicted in its latest report on the macro economy.

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