Learn mandarin - CPI to rise?4.5% in 3Q, rate hike likely

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BIZCHINA / News

CPI to rise?4.5% in 3Q, rate hike likely

(Chinadaily.com.cn)
Updated: 2007-07-30 12:45

Thirteen institutions predicated yesterday that China's consumer price
index (CPI) in the third quarter would rise a record high of 4.5 percent
and the central bank would increase the interest rate again in the
quarter, the Beijing Morning Post reported today.

The 13 research bodies include Peking University's China Center for
Economic Research, Citigroup and the State Information Center.

At an economic forum yesterday, Song Guoqing, an economist with the
Peking University's research center, expressed his opinion that the
economy is overheated.

Song's judgment is different from the official opinion that "China's
economy is operating properly." He said that the official judgment was
due to moderate levels of fixed asset investment, but if other factors
such as the trade surplus were taken into account, the growth of
investment would be higher.

Another interest rate hike is necessary to curb the overheated economy
and restrain inflation, scholars and experts said at the forum.

The 13 institutions also estimated that the nation's gross domestic
product (GDP) will see an increase of 11.8 percent year on year in the
third quarter this year.

But Song disagreed and said the GDP would grow 12.6 percent in the third
quarter.

Statistics show that China's CPI rose 4.4 percent in June compared with a
year ago, a 28-month high, while the GDP expanded 11.5 percent in the
first half of this year.

(For more biz stories, please visit Industry Updates)

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