China putting a brake on inflation

The fluctuation range of China's currency exchange rate can be further broadened to help curb rising inflation, Li Daokui, a member of the monetary policy committee of the People's Bank of China, said at a forum on Saturday. "The rapid price rises that the country faces are largely propelled by increasing costs instead of surging demand, leaving room for the Chinese yuan to appropriately appreciate to counter the rising prices of international commodities," Earlier in October, he said China can afford an annual 3 to 5 percent appreciation of the yuan.
He predicted China's trade surplus would drop from $190 billion in 2009 to$180 billion this year, accounting for 3.5 percent of the country's estimated gross domestic product (GDP) in 2010, a noticeable reduction from the pre-crisis level of 7.9 percent.
Commenting on another change in the country's economic growth pattern, he said domestic consumption has started to play a leading role among the driving factors that determine China's GDP, further reducing the country's dependence on exports.
Consumption is expected to account for 55.4 percent of China's GDP in 2010, overtaking investment for the first time as the biggest driver of economic growth, according to a report released on Saturday by Renmin University of China.