Enter multiple symbols separated by commas

China's Central Bank Sees Growth Up, Inflation Over Target

Chinese consumer inflation will average 3.2% this year, exceeding the central bank's target, as gross domestic product growth ticks up to 10.8%, the bank's research department forecast
on Friday.

In a report carried by the official China Securities Journal, it said consumer price inflation, which hit a 27-month high of 3.4% in May, was likely to reach 3.5% in the third quarter before subsiding to 3.2% in the fourth quarter.

By December, the annual rate of inflation is likely to have dropped to 2.5%, the report said. Consumer prices rose a year-average of 1.5% in 2006.

The central bank has said its maximum comfort level for inflation is 3% rate and it has been tightening policy steadily to keep a lid on prices and excess liquidity.

The research department forecast GDP growth of 11.0% in the first half of this year. GDP expanded 11.1% in the first quarter and 10.7% in all of 2006.

The research report said higher global prices for oil and non-ferrous products, along with higher prices for domestic resources and labor, would push up inflation.

China's drive to thin out energy-intensive industries would force manufacturers to close down outdated capacity, reducing the supply of steel, power and non-ferrous products and increasing upward pressure on prices, it added.

But the bank's researchers said that pork and grain prices, which were behind the acceleration in inflation in the first part of the year, had only limited scope to rise further.

Government efforts to ensure stable supplies, together with strong incentives for farmers to raise more animals and reduced demand in the hot summer months, would lead to a stabilization of meat prices by September or October, it said.

A bumper summer harvest would also help to put the brakes on grain prices, it said.

The report said investment growth would remain brisk given the strong incentives for local governments to spend, high corporate profits and Beijing's efforts to build more power stations, energy production facilities, roads and railways. "It is estimated that investment growth may rebound; the speed may pick up in the second half of 2007," it said.

The researchers said growth in China's trade surplus would slow in the second half of the year as exports weakened and imports picked up. It provided no specific forecast.

Retail sales would grow at least 15% this year.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Why women cheat?

    Is cheating bad? Why do women cheat? The founder and CEO of affair website Ashley Madison tells all, including why he has his eye on China.

  • Judge's gavel

    The Financial Industry Regulatory Authority disciplined several financial services firms and individuals in May 2015.

  • Fine wines & finance

    Why you should try something a little different on date night. Bring the romance and champagne, and a calculator too. Every once in a while have a date to talk money and finance, and keep an important part of your relationship on track. Reporter Sharon Epperson talks to a couple who does just that.

U.S. Video

  • Cramer: Here's a sign the market could rally

    Wall Street's been soaking in red, but "Mad Money" host Jim Cramer has one signal to watch for that could point to another run.

  • Burger war maneuvers

    Cramer looks at the number of company's selling burgers and tries to determine the quality names, as well as those to avoid.

  • Cramer: What's driving defense?

    Cramer says that even though President Obama has made it clear the US can no longer be the world's policeman, the country can become the world's arms dealer. Profiting from defense spending.