Mild inflation may be long-term trend in China: Economists

BEIJING, May 22 (Xinhua): Taming China's inflation has topped media headlines over the past months. However, economists said instead of coming down, mild inflation would accompany China for a relatively long period of time. China's inflation stayed stubbornly high in April, in spite of the government's efforts. The consumer price index, a main gauge of inflation, rose 5.3 per cent in April from one year earlier, slightly lower than March's 5.4-percent rise, but still higher than expected. Inflation, however, was an inevitable result for China's current stage of development, said Zhang Xiaojing, a researcher with the Chinese Academy of Social Sciences, a government think tank. China's rapid industrialization and urbanisation have pushed up prices of resources, such as labor and land, which then fuels inflation, Zhang said. Meanwhile, external factors, including rising prices of grain, resources and energy on the global market, causes imported inflation, and a sign of easing is expected to be seen in the short run, he said. Xu Lianzhong, director of the Analysis and Prediction Office of the National Development and Reform Commission (NDRC), voices similar ideas as Zhang, but chose wages as the major cause for the mild inflation trend. Over the past decades, China's economic boom has largely been built on cheap labor and excessive use of resources. But a new generation of migrant workers demanded higher pay and better treatment, which adds to labor costs at home. In an effort to shift the economy to a more domestic consumption-driven growth, the government has been striving to raise farmers' incomes and those of low and medium-income groups in cities. The move would help enhance the public's purchasing power and also boost consumer prices, Xu said.