Economy

China needs to address rising inflation: central bank governor

(Xinhua)
Updated: 2010-11-17 09:09

BEIJING - China's economy is generally doing well, but still faces inflation pressure, said Zhou Xiaochuan, the central bank governor, on Tuesday.

Zhou said the third-quarter data showed the country's economy was growing on track, but both the domestic and overseas economic environment were complicated and the recovery of developed economies was slowing.

The persistent abundance of global liquidity put emerging economies under pressure, said Zhou, who heads the People's Bank of China.

The foundation of the country's rebounding domestic demand was not solid and more efforts should be made to stimulate private investment, he said.

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China would make its policies more flexible, targeted and effective, and the authorities would tighten controls on liquidity, keep credit growth rational and proceed steadily with the reform of the exchange rate regime, Zhou said.

Inflation in China soared to a 25-month high of 4.4 percent year-on-year in October as new bank lending exceeded market forecasts.

Analysts said the quantitative easing policies of other economies would exacerbate the excess liquidity problem, resulting in further hot money inflows into emerging economies like China, and might complicate China's policies to fight inflation.

China's central bank raised benchmark interest rates last month and ordered banks to set aside more reserves last Wednesday in its latest effort to rein in liquidity.