MercoPress. South Atlantic News Agency

China says “no need for more aggressive control” of inflation

China policies in support of small and labor intensive enterprises are taking effect and there is “no need for more adjustment measures”, said on Monday a high ranking Chinese member of the Communist party.

"The macroeconomic control policies are basically in place" said Liu He, a senior official at the central finance committee under the State Council, or cabinet, in an interview with the People's Daily. "There is no need for more aggressive controls" he added. Macroeconomic control measures refer to a number of policies introduced by China earlier in the year to prevent the world's fourth largest economy from overheating. Liu He said that slower exports and investment would reduce 2008 growth to between 9.5% and 10.4%. In 2007 the Chinese economy expanded 11.9%. The trade surplus fell 12% in the first half of the year caught between weakening foreign demand and a stronger Yuan. Inflation was at 7.9% in the first half of 2008, peaking at 8.7% and has since lingered near 12-year highs but is believed to have mellowed. "Now we need to keep several policies stable so as to create a good, transparent atmosphere for companies", said Liu He who added Beijing favors more credit for small companies and letting them have access to the bonds markets. "Labor intensive companies are a priority; we must ensure they keep growing". Liu He said inflation would begin to moderate with the coming food harvest particularly a promising crop of grains. "It's totally feasible that overall prices could come under control and significantly contained this year", said Liu He. However the deputy head of the Statistics Office at the Central Bank, Jiao Jinpu said that there still was pressure from labor costs and production prices, but he also pointed out that the bank's policy was to ensure sustained economic growth "so people could better confront a certain degree of inflation". China's July inflation is estimated to range around 7%, down from June.