Chinese Inflation to Ease to 5% This Year


China's consumer inflation is expected to ease to 7 percent in the second quarter and 5 percent in the second half of the year, a government researcher said in remarks published on Tuesday.

Chen Dongqi, vice head of a research academy with the National Development and Reform Commission (NDRC), told the 21st Century Business Herald newspaper that his forecasts assumed that import prices would remain stable.

The consumer price index hit 8.7 percent in February, the highest level in nearly 12 years, before edging down to 8.3 percent in March. It rose 8 percent on average in the first quarter from a year earlier.

Chen said curbing inflation would remain a priority for Beijing in 2008, but he cautioned that the risk of an abrupt economic slowdown was on the rise due to weakening global growth.

"We have to find a balance between preventing inflation and avoiding a slowdown," said Chen.

He also said China should slow the pace of the yuan's rise.

"The yuan's appreciation has had the effect of discouraging exports and encouraging imports this year, and we should be thinking now about stability," he said.

Chen has long held the view that the currency, which has risen 18 percent against the dollar since July 2005, should not rise too much.