Inflation in China slowed in January
BEIJING: Inflation in China slowed in January, rising 2.2 percent from a year earlier, the National Bureau of Statistics said Wednesday. That was below December’s 2.8 percent increase.
China is trying to prevent overheating of its economy, which last year expanded 10.7 percent, the fastest pace since 1995. An export boom drove a $15.9 billion trade surplus in January that is pumping cash into the financial system.
Food prices jumped 5 percent in January, including a 6.9 percent increase in grain prices.
China’s central bank has set a target level of inflation of 3 percent or below this year.
The assistant governor of the bank, Yi Gang, said Tuesday that the bank was “strongly determined” to curb inflation and was monitoring the consumer price index and other economic data.
Meanwhile, the former secretary of the U.S. Treasury, John Snow, said that the United States could not force Beijing to allow faster gains in the yuan, and that dialogue was the best way to achieve appreciation.
“It’s in China’s own interest to continue to allow the yuan to expand in terms of flexibility,” Snow, now chairman of Cerberus Capital Management, which is based in New York, said in an interview in Hong Kong. “I don’t think we can force China to do anything.”
Snow made his remarks after the Group of Seven nations over the weekend urged China to allow the yuan to move more on a trade-weighted basis.
The head of the People’s Bank of China, Zhou Xiaochuan, said last week that the current pace of appreciation was “appropriate.”
The yuan has gained 6.4 percent against the dollar since China revalued the currency by 2.1 percent in July 2005 and ended a decade-old link of about 8.3 to the U.S. currency. The central bank limits movements against the dollar to no more than 0.3 percent on either side of a daily fixed rate.
Snow called for China to let the yuan rise faster during his three-year tenure as Treasury secretary and was in office when China ended the currency’s fixed exchange rate.
Snow also called for China to open its markets to fund inflows.
“Rising foreign ownership is consistent with their other objectives, which is creation of good jobs and stability in the economy,” Snow said.
World Bank sees 9.6% GDP
The World Bank said on Wednesday that China’s blistering economic growth would cool slightly this year but should still expand nearly 10 percent, driven by exports and investment, The Associated Press reported from Beijing.
But the country’s bulging trade imbalance remains a concern as exports continue to outstrip imports, the bank said in its quarterly report on China’s economy.
The World Bank said the economy should grow by 9.6 percent in 2007, down from last year’s 10.7 percent, its highest rate since 1995.
