China GDP grows strongly; inflation high

The world's fourth-largest economy expanded by a still impressive 10.6 percent in January-March from a year earlier, down from the previous quarter's 11.2 percent rate, amid weaker global demand for exports and government steps to cool an investment boom.

Consumer prices rose 8.3 percent in March over the same month last year, down only slightly from February's 8.7 percent, the highest rate in nearly 12 years, according to the National Bureau of Statistics.

The price spike that began in mid-2007 has been blamed on shortages of pork, grain and other food. The government is trying to increase output by raising farm subsidies and curbing exports, but that effort was hampered by snowstorms in January and February that wrecked crops.

"Consumer price inflation this year is still running at a high level," said Li Xiaochao, a bureau spokesman, at a news conference. "We need to further enhance agricultural production and pay attention to production of grain and pigs."

Beijing also will "adopt sound fiscal policies and tight monetary policies," he said. "It will create a favorable environment for curbing inflation."

Taming inflation is the government's top priority, says Premier Wen Jiabao, the country's top economic official.

Communist authorities worry about a possible public backlash if prices keep rising rapidly. Bouts of high inflation in the 1980s and '90s sparked protests an embarrassment that Chinese leaders want to avoid ahead of this summer's Beijing Olympics, which is meant to showcase the country as prosperous and stable.

Analysts expect inflation to stay high as late as May before it subsides.

March inflation was well above the 4.8 percent target that Wen has set for this year. Li, the statistics bureau spokesman, said that to meet Wen's target, inflation has to fall below 4.2 percent each month for the rest of the year.