Wen Jiabao: No We Can’t27 June, 2011, 17:45. Posted by Zarathustra
After the bizarrely optimistic opinion piece on Financial Times, in which the Chinese Premier Wen Jiabao demonstrated his optimism on the inflation picture, he now offers a rather gloomy picture.
Reuters quoted the Premier saying to Hong Kong media, saying that the economic growth will be kept at 8-9% this year, while the CPI inflation will be below 5%. However, the government target for the 2011 was 4%. That means yes, the inflation is under control, but with a different inflation target.
That basically reaffirm the my view (as well as probably the consensus view) that the Chinese government is unlikely to loosen its grip on its economy. Tightening stance will continue for now until the inflation picture becomes clear that they can really meet the target.
So, as it turns out, Wen Jiabao just bluffed on the Financial Times. The view that we will soon see a big rally in Chinese equities might remain to be a wishful thinking, at least for now.