China sets inflation target at 3% for 2010, leaves room for resource price reform

BEIJING, March 5 (Xinhua) -- China targets a rise of consumer price of around 3 percent this year, Premier Wen Jiabao said when delivering a government work at the parliament's annual session Friday.

Chinese Premier Wen Jiabao delivers a government work report during the opening meeting of the Third Session of the 11th National People's Congress (NPC) at the Great Hall of the People in Beijing, capital of China, March 5, 2010. (Xinhua/Liu Weibing)

The target takes into account of the carry-over effects of last year's price changes, price fluctuations of major international commodities, hefty increase of domestic money and credit supply, and consumers' ability to bear price increases, Wen said in the report delivered to the Third Session of the 11th National People's Congress (NPC).

The figure compares with a 0.7 percent fall of CPI last year as economic slowdown and lackluster demand drove prices down.

The report noted the goal leaves room for reform in resource and environment taxes and fees and in the pricing of resource products.

Wen said the government will deepen the reform of pricing of resource products as the current state-controlled pricing mechanism does no good for conserving energy and resources, and achieving sustainable development.

Zhuang Jian, a senior economist with the Asian Development Bank, said the target was lower than expected as analysts did not expect the resource price reform would come as early as this year.

"The 3 percent target is mild, which eases inflation fears. The resource price reform is very likely to stage this year," he said.

Zhuang noted although the full year target is 3 percent, there will be monthly fluctuations.

As the economy picked up thanks to the government's stimulus package, CPI returned to the positive territory last December, and gained 1.5 percent in January.