Chinese web users sceptical on inflation-busting moves

On Saturday, the central bank raised interest rates for the second time in less than three months as authorities ramp up efforts to curb rampant bank lending, rein in property prices and tame soaring inflation.

In a sign of Beijing\'s awareness of mounting public concerns, Premier Wen Jiabao addressed the nation via live radio broadcast on Sunday, acknowledging the hardships for everyday citizens but insisting prices could be contained.

But on the Internet, used by about a third of China\'s 1.3 billion people, citizens said they were not convinced by the government\'s anti-inflation campaign and expressed fears about the future.

"I\'m unable to pay back loans. Prices are high, gas prices were just hiked, the stock market is weak, my salary was cut significantly," said one man using the popular microblogging service run by web portal sina.com.

"I missed paying social insurance and family pressures are big. Everything is blowing up in my face and I\'m suffocating."

The new rate hike was the second since mid-October, when policymakers raised rates for the first time in nearly three years as they try to slow a flood of liquidity which has been fanning inflation and driving up property prices.

The consumer price index, a key measure of inflation, topped five percent in November for the first time in more than two years as food costs soared nearly 12 percent year-on-year.

Analysts have speculated that more rate hikes will follow in 2011.

The state-run China Securities Journal said Monday in a commentary that the weekend move on rates by the People\'s Bank of China was a sign that official concerns on inflation had overtaken those about maintaining growth.

The benchmark Shanghai Composite Index closed down 1.90 percent after a morning rally, as investors booked profits amid concerns that further tightening measures would come next year.

On tianya.com, one user said of Saturday\'s move by the central bank: "Our current economic policies are not meant to clean up excess money and direct the economy to stabilise, but to block up wherever the loopholes are.

"We are stuffing powder into the bombs that we bury for ourselves. Eventually the ordinary people will become the victims of those bombs."

Ever fearful of inflation\'s potential to spark unrest, authorities have been pulling on a number of policy levers to rein in consumer prices and cool the red-hot real estate market.

Earlier this month, the central bank ordered lenders for the sixth time this year to keep more money in reserve, effectively limiting the amount of funds they can lend.

Despite these measures, bank lending has remained stubbornly high and property prices have continued to rise, frustrating first-home buyers who feel apartment prices are out of their reach.

Addressing those frustrations, Wen said Sunday he understood that recent price rises had "actually made life even more difficult for people on low and medium incomes".

But he stressed that thanks to government intervention "we are fully able to control the general level of prices" and said he was confident that housing prices would come back down to a "reasonable level".

In a chat forum on the website of China\'s official Xinhua news agency, users were less than receptive.

"The ordinary people are waiting to see whether the premier can live up to his promise," one wrote.

Another said: "Stop talking too much about what has been achieved over the past five years. We just want prices to come down in real terms."

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