By staff reporter Li Xin

China’s new executive vice premier, Li Keqiang, told a Beijing forum March 23 that major concerns for the nation’s recently appointed cabinet include rising inflation rates and a threat that the economy will turn from rapid growth to overheating.

China’s consumer price index (CPI) soared to 7.1 percent in January and reached a 10-year high of 8.7 percent in February, setting the backdrop of Li and other newly appointed ministers’ speech at the China Development Forum that a government priority is to contain the inflation.

Forum participants offered a variety of explanations and possible ideas for controlling CPI, especially food prices.

In hopes of maintaining a balanced economy, the Chinese government adjusted monetary policies in the past year by tightening credit, raising interest rates five times in 2007. Authorities also increased bank reserve ratio requirements ten times and capped prices for key agricultural products. 

But some economists, including Lawrence Lau of the Chinese University of Hong Kong, suggested that given the nature of imported inflation -- a spillover of higher overseas food and oil prices -- China’s monetary policy can do little to tame a rising CPI. And Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development, said Beijing faces limited options.

“Oil prices and food prices are set by the international market. There is little you can do about it,” Gurria told Caijing. “There are also investment and liquidity issues, which the government has already addressed.”

Yet some forum participants suggested new tactics for CPI control. Joachim von Braun, head of the International Food Policy Research Institute, told Caijing that a fundamental solution to agricultural sector inflation would be to increase investment on technology and research.

Meanwhile, the commissioner of China’s National Bureau of Statistics, Xie Fuzhan, mentioned in his speech that the government should contain the fast-rising cost of labor and close the gap between rural and urban migrant workers.

The forum has been held annually since 2000 after the National People’s Congress in Beijing as a venue for Chinese government leaders to brief international company executives and senior economists about new policy directions.