The Straits Times
Published on Nov 17, 2012

Inflation China's key long-term risk: Central bank chief


BEIJING (REUTERS) - Inflation is the main long-term risk for China as the economy transitions from a planned economy to a market-based one, and deeper financial reforms are needed to complete the move, central bank governor Zhou Xiaochuan said on Saturday.

"There is a general tendency for overheating impulses during China's economic transition process, and we should always stress the need to control inflation," Mr Zhou told a financial forum.

"In most occasions, pressures from various sides (seeks) to loosen monetary policy to spur growth, but there is less push for preventing economic overheating and inflation," he said.

A main feature of China's economic transition is that many entities, including local governments, are not subject to "soft constraints", which means they tend to spend more and fuel economic overheating, Mr Zhou added.