March 10, 2011 / 10:25 IST
Li Daokui, an academic member of the central bank's monetary policy committee, told the English-language China Daily that the nation's consumer price index in 2011 would be pushed up by imported inflation, along with labour cost rises at home.
"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, because the country has recently imported as much as 55% of its oil consumption," Li was quoted as saying."An oil price of USD 120 or USD 130 a barrel might be the worst scenario for 2011," Li added.Chinese Premier Wen Jiabao said in his government work report to parliament that Beijing was targeting a 4% increase in the consumer price index (CPI) for 2011.China's CPI rose 4.9% in January and may have eased again in February.But Li, also a professor at Tsinghua University and a member in the Chinese People's Political Consultative Committee, told the newspaper that Beijing should not use yuan appreciation as a tool to address imported inflation."As soon as the yuan appreciation quickens, all the commodity suppliers are likely to raise their invoice prices accordingly. In the end, we still have to pay the price," Li explained.An annual yuan appreciation of between 5% and 6% would pose a serious threat to Chinese manufacturers, which are already suffering from significant labour cost increases, Li added.Li told the newspaper that the ratio of China's trade surplus to gross domestic product, an indicator in measuring economic imbalances, will fall to 2% in 2011 and 1.5% in 2012. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
