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China's inflation to weaken further in December: senior official
Beijing (AFP) Dec 13, 2008 China's inflation will weaken further in December as the economy continues to slow, a key policy maker said Saturday, while also confirming next year's economic growth target will be eight percent. The producer price index, PPI, will retreat "markedly" this month, increasing the possibility of deflation, said Liu Mingkang, chairman of China Banking Regulatory Commission, according to Xinhua news agency. Deflation is a situation when prices actually fall, and some economists consider it more dangerous that inflation. This is because it encourages people to postpone buying products as they expect to get a better bargain later, but that in turn only serves to further slow down the economy. Growth in the producer price index, which is very sensitive to overall trends in the economy, slowed to two percent in November, compared with 6.6 percent in October, data released earlier this week showed. The consumer price index for November was up 2.4 percent from a year earlier, a 22-month low. "PPI drops more sharply than consumer inflation during economic slowdowns, and this will mercilessly drag down consumer prices," Liu was quoted as saying by Xinhua. China is targeting around eight percent economic growth for 2009 despite the challenges posed by the global woes, Liu said according to Xinhua. It cannot be allowed to slow to six to seven percent as growth is needed to ensure sufficient employment and safeguard social stability, he said. China's policy-making elite held a three-day meeting early this week -- the most important gathering of the year -- but did not announce a growth target for 2009 at the end of their talks. Many major world economies have entered into a recession, with a big impact on China, Liu said. "It's a fairy tale to think China will remain immune from what's happening in the rest of the world," he said. In one indication of the impact the global weakening has on China's economy, the nation's exports fell in November for the first time in more than seven years. Related Links The Economy
Asian powers vow cooperation on economic crisis
Fukuoka, Japan (AFP) Dec 13, 2008The leaders of China, Japan and South Korea pledged Saturday to drum up funding to spare Asia the worst of the global financial crisis, vowing to serve as an engine to revive the world economy. |
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