Wen: Price regulation top priority

Updated: 2011-08-31 18:36


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BEIJING - Stabilizing consumer prices remains the top priority of the Chinese government's macro-regulation agenda, Premier Wen Jiabao wrote in an article to be published Thursday in the latest issue of Qiushi magazine.

The government will resolutely implement the property market regulation policy to ensure its effectiveness, Wen said in the article.

Qiushi, or Seeking Truth, is the Communist Party of China Central Committee's flagship magazine.

Commenting on China's slower growth, Wen said to a large extent it was because of the government's macro-regulation policies, but growth had been kept at a reasonable level and also within expectations.

In general, the economy was sound, amid improving relations between quality and quantity, structure and efficiency. However, some salient conflicts have been compromised, he said.

Wen noted more attention has been given to taming runaway price hikes since this year. Also, the government has done more to lessen the impact of economic and non-economic factors on the economy, and sort out problems which have a close bearing on people's interests in order to consolidate and expand the results of the fight against the global financial crisis.

"Our country's economic development continues to face a very complicated, unstable and uncertain environment both at home and abroad. We should keep a sober mind, enhance our awareness of risks, and have full expectations of the complexity and severity of the present situation," Wen wrote.

China's Consumer Price Index (CPI), a main gauge of inflation, is hovering at high levels driven by soaring food prices that account for one third of the weight.

July's reading jumped to a 37-month high of 6.5 percent, well above the government's target ceiling of 4 percent. Analysts forecast the index will continue to stay above 6 percent in August.

The pessimism is echoed by the National Development and Reform Commission, the country's top economic planner, which said on Tuesday the country's prices might continue to hover at high levels and many factors increased the difficulty in achieving this year's inflation control target.

Imported inflationary pressures have not visibly eased and global commodity prices are still high, the commission said in a statement on its website.

Many analysts expect China will face heightened pressure of imported inflation, as the weakening US dollar, a result of the ultra-loose monetary policy in the United States, could further push up commodity prices.

Domestically, NDRC said there are still upward pressures on production costs, while natural disasters and media speculation could enhance the public's expectations on inflation.

The commission also warned about uncertainties for the country's grain harvest this year, due to prolonged drought in some regions and potential natural disasters during the rest of the year.

After an array of measures were taken to tackle the stubbornly high inflation, Wen urged authorities to slacken no efforts to ensure bumper harvest of grains, push forward economic restructuring and reduce emissions and save energy.

Based on changing conditions, Wen reiterated the policy-making should be more targeted, flexible and preemptive to better deal with the relations between maintaining stable and relatively fast economic growth, economic restructuring and managing inflation expectations.

The price hike must be checked without generating big fluctuations of the economy, he added.

China's gross domestic product (GDP) rose by 9.5 percent year-on-year in the second quarter of 2011, tapering off slightly from the 9.7-percent growth posted in the first quarter and 9.8 percent in the fourth quarter of last year.

Although some economic indicators eased, many Chinese government officials, including Vice President Xi Jinping, have said China's economy will not see a hard-landing but instead be stable with relatively fast growth.