World Bank Report: China'S Growth This Year Will Be 9.5% Next Year Or 8.5%.

In October 19th,

The world bank believes that the main reasons leading to such high inflation are imported inflation factors, such as rising international raw material prices and the impact of rising domestic prices of agricultural products.

But there is also a new situation, that is, the inflection point of the labor market price in China, and the rising labor cost in manufacturing industry, causing inflation to rise.

However, given the flexibility of the labour market, the wage inflation induced inflation in the short term will not happen.

In addition, the world bank also warned that a large number of capital inflows returned in East Asia, coupled with rising inflationary pressures and rising asset prices, posed new challenges to policy and increased risks to macroeconomic stability.

Driven by the global liquidity and the depressed income of developed countries, foreign investors are confident of the growth prospects in East Asia, and capital inflows have increased substantially, leading to a large appreciation of the exchange rate. Although central banks have intervened in the foreign exchange market, they have little effect.

Stock prices and real estate prices soared in some countries.

But most countries have not yet introduced capital controls.

Vikram Nehru, chief economist of the East Asia and Pacific region of the world bank, said: "if capital inflows continue to be strong, especially in the context of weak global growth, the challenge for the authorities will be how to balance the demand for large capital inflows, especially foreign direct investment and competitiveness, financial sector stability and low inflation."

Previously, figures released just now showed that in September, foreign exchange accounted for a 16 month high in China, an increase of 406 billion 769 million yuan, more than double that in the past few months. In September, the trade surplus and FDI (foreign direct investment) plus total amounted to only 20 billion 800 million dollars, about 142 billion yuan, compared with 264 billion 800 million yuan foreign exchange balance.

The sum of trade surplus and foreign direct investment is equal to the increase of foreign exchange reserves.

It is generally believed that additional funds may be hot money.

Gao Luyi, a senior economist at the World Bank China Representative Office, said that China really needs to pay attention to the influx of hot money. At present, China's capital account is not fully open, and foreign capital can be well controlled.

Yuan Gangming, Institute of economics of the Chinese Academy of Social Sciences, pointed out that raising interest rates may lead to further entry of hot money, but without raising interest rates, prices may rise faster.

"I personally believe that interest rates should be raised, mainly to curb the real estate bubble.

Because house prices haven't been knocked down yet.

He said at a recent forum.

On the evening of 19, the people's Bank of China decided to raise the benchmark interest rate for Renminbi deposits and loans of financial institutions since October 20, 2010.

The one-year deposit benchmark interest rate of financial institutions increased by 0.25 percentage points, while the one-year lending benchmark rate increased by 0.25 percentage points.

The World Bank report also points out that China will focus its attention on the quality of economic growth from next year, especially on increasing energy efficiency.

The world bank remains optimistic about China's growth prospects in the next ten years, but changing the way of growth and investment to achieve rebalancing is more important for ensuring sustainable development at the structural, social and global levels.