China's top economic planner yesterday said prices of only some
categories of consumer goods have risen in the past few months, and
assured consumers that the country had not entered the "dawn of
full-scale inflation".
The National Development and Reform Commission (NDRC) assurance
comes amid heated inflation debates, triggered mainly by the
dramatic rise in the consumer price index (CPI) last month.
After an in-depth analysis, the NDRC, which is also the
country's price watchdog, said prices of consumer goods have risen
in only two of the eight categories.
"We know about the hot debates but our judgment is that
inflation is still structural and partial," said NDRC price
department director Cao Changqing.
But he didn't say whether the country could be threatened by
full-scale inflation in the near future.
Instead, he said the government has already implemented measures
to control price rise and increase the supply of goods.
Official statistics show the 5.6 percent inflation rate in July
was pushed mainly by steeply rising prices of food, meat (pork) and
housing-related products.
On the other hand, prices of entertainment and communication
products and clothes have dropped in the first seven months of the
year, and those of household appliances, alcohol and healthcare
goods rose only slightly.
Cao played down the risk of inflation, saying the rate of
increase in wholesale prices of industrial goods and production
materials has slowed down.
From January to July, wholesale prices of industrial goods rose
2.7 percent year-on-year, that is, 0.2 percentage points lower.
Production material prices rose 3.8 percent year-on-year, which was
2.3 percentage points lower.
Inflation warning
But some economists have warned that China already faces a high
risk of inflation because many a factor indicates that the pressure
is growing fast.
"We'd better say risks exist and take measures to prevent it
from happening," warned Wang Tongsan, director of Quantitative
Economy Institute of the Chinese Academy of Social Sciences, in an
article published yesterday.
As a leading drafter of important central governmental policy
documents for years, Wang is the second leading economist to send
out warning signals. Last week, renowned economist Justin Lin, of
Peking University, said China had entered a cycle of high
prices.
Factors such as record high investment costs, growing labor
costs, increasing consumption demand and price hike in the
international market have fueled inflation fears, Wang has written.
"All these factors already exist and are putting pressure."
Wang has even said that the government has to intensify its
efforts to bring this year's inflation rate below 5 percent, the
international benchmark for inflation. The rate in 2005 and 2006
was 1.8 percent and 1.5 percent, but it climbed to 3.5 percent in
the first seven months of this year.
"We should step up our efforts to prevent inflation in 2008,"
Wang has written. "Even after pork supply is normalized, other
factors could trigger inflation."
(China Daily August 21, 2007)
