The State Information Center, a research unit under the National Development and Reform Commission, has proposed China raise its inflation target to between 5 and 7 percent for this year and next year.

The central bank has set the target at under 4.8 percent for this year.

The center said "keeping a stable and fast economic development," to some extent, conflicted with the policy of "curbing inflation." And for a developing country, an inflation rate between 4 and 8 percent could be called "stable."

As a government think tank, the center's proposal signals a shift of policy tone from preventing overheating and fighting inflation to supporting the economy.

It warned domestic consumption, although looking quite prosperous at the moment, could suffer in the following months as spending on property and automobiles have peaked.

"As the biggest driver of China's economy since last year, consumption has seen no new points as strong as real estate and automobiles to bolster people's enthusiasm of spending," said the center.

At the same time, investment and trade, two other major drivers of the economy, showed trends of a slowdown in the past months, which stirred concern over the economy, it said.

(Shanghai Daily August 18, 2008)