China's ongoing battle against inflation will continue into 2009, according to a new report produced by Industrial and Commercial Bank of China (ICBC).
However, ICBC predicts that Chinese stock markets will continue to
suffer significant uncertainties, "resulting in their seesawing during
2010 and 2011," state media reports. After that, prices are again
expected to rise.
Between 2009-2011 period, the report states, liquidity should "remain
abundant" with M2 supply rising rapidly, but "the possibilities of
temporary liquidity shortfalls would increase." It concludes that "the
major task of China's economic control remained curbing inflation and reducing risks of serious economic fluctuations."
Consumer prices officially rose 7.7 per cent year on year in May -
slightly down from April's 8.5 per cent rate rise but well above the government's 2008 inflation target of 4.8 per cent.
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