China says stabilising prices still priority

Stable prices remain the top priority for the Chinese government, but any policy moves must avoid hurting economic growth, China's Finance Minister Xie Xuren said on Thursday. The government will try to ensure appropriately fast economic growth, while managing inflation expectations, Xie said in a report to the National People's Congress, the parliament.
"We need to make stabilising prices the top priority. We will slow down price rises, but avoid causing big fluctuations in economic growth," Xie said. The government will make its macro-economic policies more targeted, flexible and forward-looking and implement policies based on domestic and global economic conditions, Xie said.
Xie's comments, published by the Xinhua news agency and other state media, underscored the official concerns about slowing economic growth, particularly amid market jitters the United States could enter a new recession. But few analysts expect the government to relax monetary policy in the near term, after annual inflation in China hit a three-year high of 6.5 percent in July.
The central bank has refrained from raising cash reserve requirements for banks since June, after increasing it every month in the first half of 2011. It last raised interest rates on July 6, the fifth increase since October. The government will move actively to use fiscal policy in stabilising consumer prices, Xie said without elaborating. China will also step up efforts to rein in local government debt and deepen fiscal reforms, Xie said. Analysts warn that heavy local government debt loads could pose a big threat to the Chinese banking system.