China’s Li warns of imported inflation risks as economy recovers

China’s Premier Li Keqiang highlighted the risks of imported inflation as the economy recovers, stressing that grain and energy supplies are key to keeping prices in check. 

Officials must “handle multiple difficulties properly to stabilize growth as well as controlling inflation, with attention to be paid to preventing imported inflation,” Li said at a seminar with economists and entrepreneurs on Tuesday, according to a report in the official Xinhua news agency.  

Prices in the country have been “generally stable” and provided support for economic stability in a “complicated international environment,” Li said. “Stabilizing grain and energy costs is the key to stabilizing prices.” He added the government will ensure crop harvest for the full year and further improve the supply of coal to prevent power shortages in summer.

Li’s warnings came in the same week the US reported the fastest inflation since the 1980s, fueling speculation the Federal Reserve will hike interest rates aggressively in coming months. Several central banks have surprised with bigger-than-expected rate increases since Wednesday.

The premier also called on officials to accelerate the roll-out of a package of 33 measures announced in late May aimed at boosting the economy. 

“There is rather big room for the implementation of the policies as they have been launched for just over a month,” Li said. The measures should be implemented in a “reasonable and appropriate” manner that “does not overdraw the future,” he said.

Li signaled that previously implemented policies are starting to have a beneficial effect on the economy, which he said stabilized in June. However, the foundation of the recovery is not yet solid, he warned.