Government and Policy

Premier confident of keeping inflation in check

(Xinhua/Agencies)
Updated: 2010-12-26 16:56

Chinese Premier Wen Jiabao (L) chats with audience in a live broadcasting program at a China National Radio (CNR) studio in Beijing, Dec 26, 2010. [Photo/cnr.cn]

BEIJING- With a series of measures being adopted to curb price spikes, the Chinese government is confident of keeping prices at a reasonable level, Premier Wen Jiabao said Sunday morning.

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"Inflation expectations are more dire than inflation itself," Wen said, urging people to remain confident and government agencies to act to stabilize prices.

The premier made the remarks while answering a listener's question during a radio broadcast by China National Radio.

Steps taken in the past month, including outright price controls to curb speculation and monetary tightening, had started to produce results, he said.

"I believe we can keep prices at a reasonable level through our efforts. As a major leader of the government, I have the responsibility and I have the confidence, too," he said.

"Until now, the measures are not implemented well enough, and we will reinforce our efforts in two ways," Wen said.

The government plans to build 10 million units of affordable housing in 2011, up from this year's target of 5.8 million.

China will also increase efforts to curb speculation in the real estate market, mainly through monetary policies and stricter use of land, Wen said, without giving details.

Property transactions as well as land costs, a major contributor to high housing prices, have shown signs of a rebound in recent weeks, triggering concerns of more tightening.

Despite all the challenges, Wen said: "I believe property prices will return to reasonable levels through our efforts. I have the confidence."

The consumer price index (CPI), a main gauge of inflation, rose to a 28-month high of 5.1 percent year on year in November, according to government statistics.

Food price rises contributed to 74 percent of the CPI growth for the month.

Wen said the country had a good agricultural supply base which gave the government confidence that it could stabilize prices.

In a bid to control inflation, the government has also increased the bank reserve requirement ratio six times and lifted interest rate twice this year, he added.

Further, authorities have introduced a package of measures including cutting fees for transportation of agriculture products and intensifying the crackdown on food price speculation.

The overall price level, especially of major consumer goods, has now begun to drop, Wen said.

"The fundamental way to stabilize prices is to achieve a balance of supply and demand, which requires continuous development of agriculture," said the premier, adding that the central government has worked out measures to boost agricultural production.

China's central bank announced Saturday to raise the one-year lending rate to 5.81 percent and one-year deposit rate to 2.75 percent, effective from Sunday.