China growth seen resilient but inflation stubborn

By @ibtimes on

China's economy may grow by 9.6 percent in the second quarter of 2011, a government think tank said in a report on Wednesday, keeping pace with first quarter growth.

The upbeat outlook from the State Information Center underscores the confidence within China that its vast economy, the world's second-largest, is sufficiently resilient to withstand steady monetary policy tightening.

Data had shown earlier this month that the roaring Chinese economy managed to grow 9.7 percent in the first quarter, shrugging off two interest rate rises in the period.

But buoyant activity means China may have a harder time cooling prices.

Indeed, the State Information Center predicted the consumer price index will climb 5 percent in the second quarter, according to its report, which was published in the official China Securities Journal.

For the year, Chen Dongqi, a senior researcher at the National Development and Reform Commission (NDRC), China's top economic agency, said annual inflation could run around 4.5 percent, breaching the government's 4 percent target.

Chen's remarks were published in the China Securities Journal on Wednesday.

To prevent consumer prices from spiking too far, many analysts expect China to raise rates just once more, by 25 basis points, this year.

High global commodity prices and steep home prices helped drive China's inflation to a 32-month high of 5.4 percent in March.

(Reporting by Soo Ai Peng and Koh Gui Qing; Editing by Ken Wills)

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