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China's Macro Control to Focus on Taming Inflation

Amid mounting pressure from rising domestic prices, the Chinese central authorities said Tuesday it would put both overheating hazards and inflation risks at the top of its macro control targets next year.

Endeavor will be made to prevent the national economy from overheating and at the same time to avoid the evolvement of real inflation on the back of current price hikes, according to a conference of the Political Bureau of Communist Party of China (CPC) Central Committee.

The conference was presided over by Hu Jintao, general secretary of the CPC Central Committee. Actually a conference of the Political Bureau was held in July this year on the economic issues at that time, at which the top macro control target was set to prevent the economy from overheating.

The new goal comes in reaction to soaring prices in the second half of the year.

The latest monetary policy report published by the central bank said excessive growth in investment, ballooning trade surplus and credit remained the prominent problems of the Chinese economy.

"China still faces severe situation in liquidity," it said.

The country's investment in urban fixed assets rose 26.9 percent in the first ten months, 0.1 percentage point higher than the growth rate in the same period last year and 0.5 percentage points higher than the January-September figure, according to the National Bureau of Statistics (NBS).

China's foreign exchange reserve topped US$1.43 trillion by the end of September, according to the country's central bank.

Along with persistent liquidity problems, the country was also arrested by inflation concerns as the consumer price index, a major indicator of inflation, rebounded to a high of 6.5 percent, the same record high scored in August and well above the government-set alarm level of three percent.

China's top statistician Xie Fuzhan predicted the country's CPI will rise 4.5 percent to 4.6 percent for the whole of the current year, which will indicate a moderate and tolerable inflation, in a speech made at Tsinghua University last week.

Xie noticed that apart from rising food prices, global price rises for crude oil fuelled price rises for industrial products. Meanwhile, price rises for nonferrous metals and iron ores also contributed to the CPI increase.

He also warned that substantial price rises for real estate and equities would translate to higher risks on economic growth in the long term.

The economic conference on Tuesday also stressed that domestic demand will continue to be expanded in order to turn consumption into a more powerful driving force of the national economy.

The central authorities would make greater achievements in improving the livelihood of the common people next year, and in particular better the lives of low-income people, according to the conference.

"It is very critical for the government to play a good role in next year's macro economic control," said Hu Jintao at a meeting with non-Communist party members days earlier to hear from them suggestions on the economic work for next year.

(Xinhua News Agency November 28, 2007)

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