BEIJING - The challenges facing China's economy are currently not enough to force the government to shift its stance on its prudent monetary policy or to issue a new round of economic stimulus policies, UBS Securities economist Wang Tao wrote in an e-mail Tuesday.
China's economic momentum is still strong, though inflation remains stubbornly high as food prices, which accounts for about one-third of the basket of goods used to calculate the inflation rate, stay at high levels, Wang wrote in an e-mail to clients.
The country's export growth is expected to slow, she wrote.
Meanwhile, domestic demand remains strong, boosted by robust capital expenditure and property development, she wrote.
Wang expects the country's consumer price index (CPI), a main gauge of inflation, to increase more than 6 percent in August compared with one year earlier. She also forecasts that the pace of the country's CPI will ease during the rest of the year, and decelerate to around 4 percent by the year's end.
The Chinese government set a target of containing CPI growth within 4 percent in 2011.
However, the National Development and Reform Commission, the country's top economic planner, said on Tuesday the country's prices might continue to hover at high levels and many factors increased the difficulty in achieving this year's inflation control target.
Imported inflationary pressures have not visibly eased and global commodity prices are still high, the commission said in a statement on its website.
Domestically, there are still upward pressures on production costs, while natural disasters and media speculation could enhance the public's expectations on inflation, it said.
The commission also warned about uncertainties for the country's grain harvest this year, due to prolonged drought in some regions and potential natural disasters during the rest of the year.
China's CPI gained 5.5 percent year-on-year in the first seven months of this year. In July, the index jumped to a 37-month high of 6.5 percent, well above the government's target ceiling.
