Assessing the future of Chinese economics
Standing here on
Data released by the National Statistic Bureau (NSB) on
Farmers have not been able to beef up production in the last 6-7 months pig raising cycle. Pork shortage is still prevalent today driven overall food prices up. Fowl price has choked up too as consumers turn from pork to white meat. Vegetable rose 30 % year on year at year end and fruits up by 13 %.
Since food accounts for about 80 % in Chinese CPI basket, it does distort inflation rate to a certain extend. Yet, it still reflects a good over all cost push picture. And to aggravate the plight of food cost, crude oil future soared past the US$ 100 historical mark on
Meanwhile, rapid construction growth has pushed
February CPI which is due to be released in March 11 is likely to be much higher than the new 11 year high of 7.1 % in January and may possibly break a hard to swallow double digits figure.
The twin problem of inflation and export markets will have a knock on impact upon
I think the imminent task for the policy maker is to tame down inflation more than accelerate growth. Credit injection in January to achieve growth suggests that inflation is likely to have further legs on. It would keep inflation high or may cause it to sky rocket.
I, therefore, suggest a graduate downward GDP growth target from the present 11.5 % to 7-8 % in 2010. It is time to tighten monetary policy further with more reserve requirement. Fiscal wise, cool down public expenditure to tame inflation. Failure to do so,
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