Cutting inflation to remain top goal - Zhou

Updated: 2008-05-10 19:33


Zhou Xiaochuan, the People's Bank of China governor, is surrounded by reporters at a financial forum in Shanghai May 9, 2008. []

SHANGHAI - China's monetary authorities are struggling to address conflicting policy goals, but inflation will remain the top policy concern, the country's central bank governor said on Saturday.

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While the United States and other countries are more focused on fending off a recession, China's monetary policy must target inflation over growth and employment, Zhou Xiaochuan, the People's Bank of China governor, told a forum in Lujiazui, Shanghai's financial center.

"There is no cure-all medicine, and we have to make the final decisions -- everyone hopes there would be a cure-all solution, but there is not," said Zhou.

China's consumer price inflation would likely to rise to 8.5 percent in April from 8.3 percent in March, two sources familiar with the data said late on Thursday. The data, which is subject to last-minute revisions, will be officially released on Monday.

Meanwhile, the government said on Friday that China's producer price index, or factory-gate inflation, hit a three-year high of 8.1 percent in April, showing a sustained build-up in pressures on consumer price inflation.

Zhou listed development of financial institutions and the imbalance in global money transfers as other issues that China's monetary policy may have to target.

He said China needs to reduce the savings ratio as the fundamental way to address its over-reliance on trade, which now accounts for more than 60 percent of its annual GDP, but he did not elaborate on possible specific measures.

On other issues, Zhou said Beijing has yet to reach a consensus over how to develop a properly functioning domestic bond market.

Disputes remain about market infrastructure, the regulatory framework as well as laws and regulations, Zhou said.

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