China’s leaders wrapped up an annual economic planning meeting on Sunday with a pledge to keep growth on track while stepping up moves to combat inflation and other potential destabilizing problems.
The vow to keep the economy on an even keel came a day after the government reported that inflation surged to a 28-month high in November, despite efforts to counter speculation and increase food supplies.
A brief statement by the official Xinhua News Agency announcing the end of the conference, held each year in early December, gave no details. It said the government would keep its policy flexible, proactive and prudent while trying to maintain a balance between fast growth and stability.
Inflation surged to 5.1 percent in November, way above the government’s original target of 3 per cent. It was mainly driven by an 11.7 per cent year-on-year jump in food and utility prices.
“November’s price rises are beyond people’s expectations,” said Sheng Laiyun, spokesman for the National Bureau of Statistics, in announcing the data.
The higher-than-anticipated rate raised expectations that China’s central bank will go ahead with another interest rate hike, acting to slow growth at a time when the U.S. and Japan are still focusing on stimulus for their own lagging economies.
Beijing has sought to reassure the public that it has inflation under control, cracking down on speculation in commodities and ordering refineries to quickly raise production to counter diesel shortages.
“Prices will be stable as long as ministries and regional authorities earnestly implement the central government’s measures,” Xinhua quoted Sheng as saying Saturday.
While authorities say three-quarters of the jump in inflation is due to higher food prices, Beijing is struggling to curb a flood of money circulating through the economy from massive stimulus spending and bank lending that helped China rebound from the global crisis.
On Friday, China ordered banks to increase their reserves by 0.5 percent of deposits to help curb surging lending, the third reserve increase in five weeks.
Chinese banks lent a total of 564 billion yuan ($82 billion) in October. That would push total lending so far this year to 7.45 trillion yuan, suggesting it will overshoot Beijing’s official 2010 lending target of 7.5 trillion yuan.
China raised interest rates Oct. 19 for the first time since the crisis, highlighting the divergence of its robust expansion from the United States, Europe and Japan, which still are trying to shore up growth.
The ruling Communist Party’s top body, the Politburo, announced Dec. 3 that it was ordering a “prudent monetary policy” next year, a change from the “relatively easy” credit policy in place throughout the crisis.
China’s rapid economic growth eased to 9.6 percent in the three months ending in September from a post-crisis high of 11.9 percent in the first quarter. It is expected to fall further in coming months but to stay strong.
Keywords: Chinese economy