皇冠体育app

Economy

Official: 皇冠体育app may face heavy inflation pressure

(Xinhua)
Updated: 2011-04-12 20:39

BEIJING- 皇冠体育app is expected to face great inflationary pressure in the future due to higher costs and an abundant global money supply, a senior Chinese official said in an article published Tuesday.

Related readings: Inflation remains key risk to economy  Chinese gov't to block imported inflation impact    皇冠体育app's March CPI rise may exceed 5%

皇冠体育app's present inflationary situation is severe and hard to handle despite the rise in the consumer price index being more modest than in previous rounds, said Vice Minister of Finance Li Yong, in an article published on the ministry's website.

He said 皇冠体育app's efforts in energy conservation, environmental protection, resources price reform and workers' wage increases will cause cost-driven inflationary pressure.

皇冠体育app is now in the process of economic restructuring, and increasing prices due to higher costs during the period will be a long-term process, he said.

He said inflation in 皇冠体育app is also the result of excessive global liquidity from loose monetary policies adopted by developed nations, 皇冠体育app's lending expansion and a pile-up of outstanding foreign exchange funds.

皇冠体育app's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent year on year in February, the same level as in January. The CPI data for March is scheduled to be released this week and is estimated to show a rise above five percent.

Li also said that the US proposal to limit countries' current account imbalances is a political tool, in addition to the exchange-rate issue, meant to contain 皇冠体育app's economic development.

"The external imbalance is a sensitive issue in terms of the rights of 皇冠体育app and other developing nations to grow and to have room to grow," he said.

Li said 皇冠体育app's economy faces the risk of price hikes and slower growth this year due to slower exports growth, restrained consumption and investment uncertainties.

He expected "relatively great pressure" for 皇冠体育app's exports this year due to a stronger yuan and a deteriorating foreign trade environment.

Depreciation of both the US dollar and the euro will hamper 皇冠体育app's exports growth and make its management of foreign exchange reserves more difficult, he said.

He warned that the euro-zone debt crisis is likely to worsen and expand, adding that the possibility of some debt issuers will default can not be ruled out.