'Inflation China's key long-term risk'
There is a general tendency for overheating impulses during China's economic transition process and we should always stress the need to control inflation, Zhou told a financial forum.
In most occasions, pressures from various sides is to loosen monetary policy to spur growth, but there is less push for preventing economic overheating and inflation, he said.
A main feature of China's economic transition is that many entities, including local governments, are not subject to soft constraints, which means they tend to spend more and fuel economic overheating, Zhou added.
China's annual inflation eased to 1.7 percent in October from 1.9 percent in September after a two-year fight by the central bank to bring it back under the government's 4 percent target after the effects of a 2008-09 economic stimulus programme lifted CPI to a three-year high of 6.5 percent in July 2011.
The policy tightening needed to do so pushed required reserve ratios (RRR) at commercial banks to a record high of 21.5 percent as the central bank strove to lock up excess liquidity that fuelled speculative investments and drove up basic prices. The downturn encountered by China subsequently, as the European Union's sovereign debt crisis has festered and sapped demand for Chinese exports from its single biggest
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