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To: TobagoJack who wrote (9014)	3/1/2004 8:01:31 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

First re-peg on it's way. Chinese Premier, central bank chief warn on inflationary dangers Mon Mar 1, 2:40 AM ET Add Business - AFP to My Yahoo! BEIJING (AFP) - Chinese Premier Wen Jiabao and central bank governor Zhou Xiaochuan have warned that over-investment and inflationary pressures are putting the country's economy at risk, state press reported Monday. In the latest remarks expressing rising concerns among China's political elite about an inflationary crisis similar to that seen in the mid-1990s, Zhou said that increases in the consumer price index (CPI) suggest that China's economy is facing price pressures. He asserted that "measures would be taken to prevent it" and warned that any further rises in prices would create problems for the central bank in controlling inflation, the Shanghai Securities News quoted him as saying. China's main economic problems this year are inflation and over-investment, and "power and transportation shortages," he said. In a separate article, Wen also warned about the impact of over-investment and was quoted as saying that the government will take measures to prevent inflation and work to ease the shortages in raw materials, energy and transportation. The latest warnings from the top tier of government are likely to add to speculation about how China plans to tackle the excesses of its roaring economic growth levels. China's CPI reading hit 3.2 percent last month, its highest level since 1997, while producer prices also rose sharply. Analysts have predicted that if the country is to combat inflation it will be forced to raise interest rates for the first time in over a decade this year in a bid to take the steam out of the economy. In a speech published last week, Guo Shuqing, vice-governor of the People's Bank of China and director of the State Administration of Foreign Exchange, warned that one side effect of surging capital inflows -- much of which are being driven by revaluation speculation -- are reducing the ability of the central bank to carry out monetary policy operations effectively. China fought its last battle against inflation in 1993 and 1994 after former Chinese leader Deng Xiaoping's in his 1992 "southern tour" triggered a major investment boom by saying that "to get rich is glorious".