LONDON, June 11: Inflation in China is under control and government curbs have succeeded in checking over-investment in some sectors of the red-hot economy, Finance Minister Jin Renqing said on Friday.
Jin told reporters in London that the economy was performing well and measures Beijing had put in place to engineer a soft landing for the economy had paid off.
Ever since the beginning of this year, the Chinese government has transformed its fiscal policy from proactive to a prudent fiscal policy..., he said on the sidelines of Group of Eight finance ministers meeting. Inflation is under control... Excessive fixed asset investment in some areas has come under control.
China’s economy grew 9.4 per cent in the first quarter from a year earlier, and economists polled by Reuters expect a relatively modest slowdown for the whole year to 8.8 per cent, compared with 9.5 per cent in 2004.
But producer price inflation, which feeds through to consumer prices a few months later, unexpectedly accelerated in May to 5.9 per cent, the quickest rate this year.
That suggested credit and investment curbs aimed at putting the economy on a more stable footing were not yet easing pressure on manufacturers’ input costs.
Jin said he expected the government’s fiscal deficit to fall to 2 percent of gross domestic product (GDP) this year from 2.7 per cent the previous year.
Jin will meet finance ministers from Group of Seven industrialised nations plus Russia (G8) over breakfast on Saturday.
The G8 is expected to step up pressure on China to ease it grip on the yuan currency, pegged at 8.28 to the dollar.
Canadian Finance Minister Ralph Goodale told Reuters in an interview that any Chinese move to link the yuan to a basket of currencies would not be going far enough, although he said it was a sign of willingness to give some ground.
Japanese Finance Minister Sadakazu Tanigaki said on Friday that China should move towards a flexible foreign exchange policy but that the timing was up to China. —Reuters
