China think-tank proposes to raise inflation target

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SHANGHAI, Aug 13 (AFP): A Chinese government think-tank today proposed raising the country's official inflation target for 2008 and 2009 to five to seven per cent, up from this year's objective of 4.8 per cent.

"The inflation target should be raised moderately to give more room to pursue policies to maintain stable and rapid economic growth," the state information centre said in a report published in the China Securities Journal.

China's economy has slowed, growing 10.4 per cent in the first half of the year compared with the 11.9 per cent recorded for all of 2007.

But the government has been reluctant to adopt policies aimed at boosting growth for fear of triggering higher inflation.

Economists say China will almost certainly miss its current inflation target of 4.8 per cent, particularly after buoyant global energy prices pushed inflation to a near 12-year high of 8.7 per cent in February.

China's July consumer inflation was 6.3 per cent, down from June's 7.1 per cent and May's 7.7 per cent, official data showed Tuesday. Food costs along with higher energy prices have been blamed for the elevated inflation rate.

But the producer price index, which measures the value of finished products when they leave the factory, jumped 10.0 per cent last month from a year earlier, the steepest rate in 12 years.

Wednesday's report said inflation was likely to be less of a constraint on China's macroeconomic policy in the second half of the year, due to easing global energy prices and a good harvest.