Chinese Premier Wen says fighting inflation is priority

City A.M. Reporter
FIGHTING inflation is a priority for China and the government must ward off threats to social stability stemming from rapid price increases, Premier Wen Jiabao said yesterday.

Wen’s comments ahead of China’s annual parliament session from 5 March showed the sensitivity among ruling Communist Party leaders to public grumbling about rising real estate and food prices.

That wariness has been amplified by jitters about fallout from the unseating of Middle East rulers.

Wen, speaking on an online forum, steered clear of problems in the Middle East, stressing instead that his real fears are homegrown and bound up with economic pressures, especially disquiet about prices, jobs and corruption.

“Rapid price rises have affected the public and even social stability,” Wen said. “The Party and government have always made a priority of keeping prices generally stable.”

China has ample grain and “abundant” foreign exchange reserves that would help to keep price rises in check, Wen added. But he did not say how the government might use its foreign exchange reserves for that end.

Wen also said that maintaining social stability was central to the country's foreign exchange policy, and required a cautious approach to increasing the value of the yuan.