Chinese Inflation Threat a Paper Tiger?

China's Premier Wen Jiabao says fears his country cannot control inflation are unfounded.

"There is concern as to whether China can rein in inflation and sustain its rapid development," Wen writes in the Financial Times. "My answer is an emphatic yes."

China, notes Wen, has made capping price rises the priority of macroeconomic regulation and introduced a host of targeted policies.

“These have worked,” says Wen. The overall price level is within a controllable range and is expected to drop steadily."

Wen says one notable result of China’s response to the crisis is that the nation has maintained steady and fast growth.

“Between 2008 and 2010, China’s gross domestic product grew at an annual rate of 9.6, 9.2 and 10.3 percent, respectively.” Wen says. “The consumer prices index over the same period was 5.9, -0.7 and 3.3 percent; 33.8m new urban jobs were created. China has maintained sound growth this year.”

Wen also points out that China’s output of grain, of which he says there is now an abundant supply, has increased for seven years in a row, plus which China has built 10,800 km of new railways, about 186,411 miles of new roads and installed 210m kilowatts of new power capacity.

“We have boosted support for science and technology, including by encouraging companies to carry out technological upgrading and innovation,” Wen says. “There is an oversupply of main industrial products. Imports are growing fast. We are confident price rises will be firmly under control this year.”