Could Olympics be a turning point for CPI growth?
The Olympics won't be a turning point for CPI growth as the Games is not the main factor contributing to high prices.
Even without the Games, the trend of fast growth in CPI cannot be checked if the risks of economic overheating, excessive liquidity and imbalanced economic structure cannot be removed.
Do you think the blizzard that struck China early this year and the May Wenchuan earthquake will have any influence on CPI?
It is sure that the extreme natural disasters will push up inflation to some extent. But the impact is limited. They are not the leading factors in pushing up high prices.
Beijing Mayor Guo Jinlong said at a National People's Congress (NPC) session earlier this year that the capital city was set to cap its CPI growth within 3.5 percent for this year. Will Beijing attain such a goal?
It is not easy for China to keep CPI growth below 4.8 percent this year, with the figures all above eight percent in each of the first four months. With high inflation level nationwide, Beijing is also under tremendous pressure to realize the goal of 3.5 percent; and with the Olympics, the task will be more difficult to accomplish.
Will the current high prices have any adverse impact on the Olympics?
Yes. First, high prices will increase the costs of building Olympics venues. However, most of the budgets for the infrastructures were spent in the previous years when the prices were lower, so high prices in 2007 and 2008 didn't lead to significant increases in the costs of building the venues. Second, high prices, coupled with the appreciation of the Chinese currency, may prevent some overseas tourists from coming to China to watch the Games.
Beijing Mayor Guo Jinlong said early this year that the city would take some effective measures to prevent runaway inflation and would even exert temporary price controls when necessary to ensure the supply of important products and services. How do you think of these measures? What do you think are the solutions to runaway inflation?
First, the government should try its best to increase supplies and ensure necessary reserves of products. The aim is to keep goods prices in check. It should also prevent price rigs and vicious price increases. It is doable to exert temporary price controls, if necessary, to ensure residents' normal life is not hampered.
