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China sees no need for price controls yet

CHINA

China has no need to implement price controls for now, because other measures to curb inflation have already yielded initial results, a top central planning agency said on Tuesday.

   

The Chinese government said two weeks ago that it would launch price controls if necessary, while focusing in the short run on other measures, such as clamping down on speculation and increasing the supply of commodities in demand.

   

In a statement on its website, the National Development and Reform Commission (NDRC) suggested these steps had been sufficient for the time being. It added that any price controls, if implemented, would only be temporary.

   

"The recent efforts to stabilize consumer prices have produced initial results and currently there is no need to launch nationwide price intervention," it said.

   

China's consumer price inflation sped to a 25-month high in October, rising 4.4 percent from a year earlier. There is market talk that the number edged higher in November.

   

China's announcement earlier this month that it might turn to price controls has met strong criticism from economists who warn that such administrative measures could prove counter-productive, leading businesses to limit the supply of goods and paving the way for more serious inflation.

   

The NDRC, however, defended price controls as a viable policy option.

   

It said that price controls had helped China defeat inflation in 2008, and it noted that developed economies, including the United States and Japan, have applied selective controls to tame price pressures in the past.

   

"Even if we take price control steps, they would not affect firms' normal operations and would not mean a return to a command economy," it added.

  

Financial markets have also been rattled by fears that Beijing may step up the pace of policy tightening to curb price pressures.

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