China's consumer inflation will exceed the government's alarm level this year as housing and food prices rise rapidly, fuelled by aggressive fiscal stimulus. The severe inflation could destroy the country's hard-won growth and lead to the bursting of a massive asset bubble followed by years of decline, several economists warn.
China's growth-driven policymakers should slam on the monetary brakes and slow the growth down, some observers suggest. However, a sudden shut-down of credit could trigger a short circuit in the recovery, potentially negating the results of the stimulus efforts so far.
The country's consumer price index CPI is likely to grow by 4.9% year-on-year in 2010, exceeding the government's alarm level of 4%,...
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