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"The main cause of inflation is cost increases, that is, rising commodity prices, the cost of imported raw materials, and accelerating wage growth," Li said. He also said surging oil prices had weighed on the world's second-largest economy, which imports as much as 55 percent of the oil it consumes.
"As the turmoil in North Africa and the Middle East leads to higher and higher crude oil prices, certainly it's a major concern for China's economy," Li said. The "worst scenario" for 2011 would be if oil prices soared to $130 a barrel, he said, adding that the government and Chinese companies were working on plans to hedge against further increases in international commodity prices.