china-sets-ambitiously-low-inflation-target

China sets ambitiously low inflation target

China's 3% inflation rate target comes as a surprise, as CPI is likely to exceed that level in the second quarter, economists warn.
China premier Wen Jiabao
China premier Wen Jiabao

The Chinese government has set a target for consumer price increases in 2010 that is aggressive, given that this is only the second year of recovery, credit is still flowing from relatively loose monetary policy, and companies are still sitting on unused loans received last year.

When delivering his annual address to the National People's Congress NPC in Beijing -- a 10-day meeting that is the focal point of the country's political and economic calendar -- Premier Wen Jiabao said that China will target 8% economic growth and aim to restrict consumer inflation to no more than 3% this year.

The inflation target was the key surprise, economists at Citi said after Wen's two-hour...

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