A report on the national macro-economy conducted by China’s Renmin University revealed that the current brisk economy would not trigger widespread inflation in spite of the great annual growth achieved in 2007. Instead, the economic momentum next year will ebb slightly with the expected annual growth rate estimated at 10.5%.

 

The report concluded that overall demand is roughly balanced with overall supply, and inflation is being just kept at bay.

 

Liu Yuanchun, a professor with Renmin University, conducted an analysis showing how food prices and other staples have sent the CPI up, seemingly causing the inflation specter to loom. Yet given the fact that inflation is caused by a host of complicated parameters, it will not be triggered anytime soon. But he said that in the long run, structural reforms in the prospective market would give rise to structural, mild and reasonable price increases.

 

Liu suggested the macro-economy should implement financial subsidies as well as a stable pricing mechanism for agricultural products in lieu of an across-the-board retrenchment policy. The government should increase their interests moderately to head off foodstuff price hikes that are considered to be a major indicator of inflation.

 

He also added that this year’s economy has reached its zenith before resuming another cycle, but nevertheless inflation has been kept at bay. He concluded that, with a balanced demand-supply relationship, the Chinese economy is still sound and safe.

 

(China.org.cn by He Shan December 17, 2007)