China must be careful to keep its economy from overheating because that could fuel a spike in inflation, the deputy head of the country's statistics bureau said.
“To avoid a fast rise in inflation and too high a cyclical peak, China must strive to maintain a stable economic recovery and avoid too hurried an increase in economic growth in the near term,” Xu Xianchun, deputy head of the National Bureau of Statistics, was quoted as saying by the official Liberation Daily.
China's consumer price inflation has been negative for six straight months and most economists expect prices to start creeping up only slowly by the end of this year.
The government has stressed repeatedly that it will maintain an appropriately loose monetary policy and stimulative fiscal policy to ensure that the economy can recover after slowing to a near halt at the end of last year. The economy grew 7.9% in the second quarter on a year-on-year basis.
Goldman Sachs warned last week that Chinese policy makers were falling behind the curve in monetary tightening, forecasting that growth could leap to 11.9% in 2010. (Reuters)