Jim O’Neill, chairman of Goldman Sachs Asset Management, said China’s inflation “won’t be a problem” in the second half of this year and the government will stop tightening policies as price gains moderate.
“China’s economy is probably slowing down more than people realize,” O’Neill, who coined the BRIC acronym for the developing economies of Brazil, Russia, India and China, told reporters in Hong Kong today.
China’s inflation stayed above 5 percent for a second month in April, exceeding Premier Wen Jiabao’s 4 percent target, a government report showed yesterday. Daiwa Capital Markets says policy makers face a “dilemma” because of the risk that measures to curb prices will lead to a slowdown in the world’s fastest-growing major economy.
Price increases will moderate in the second half, drawing closer to the government’s target, O’Neill said.
The central bank has raised interest rates four times since mid-October and reined in credit growth that surged to a record in 2009. The economy grew 9.7 percent in the first quarter from a year earlier. Inflation was an annual 5.3 percent in April.
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