SHANGHAI, Oct 11 (Reuters) China faces growing pressure for the economy to overheat and inflation to rise, and government policy next year should focus on measures to stabilise prices, the top government policy research institute said on Thursday.
The Chinese Academy of Social Sciences said in its autumn report, published by the official Shanghai Securities News, that a range of long-term factors, not merely a spike in food prices, was behind rising inflation this year.
High investment and economic growth for the past several years, excessive liquidity in the money market, and rising wages and power generation costs helped to boost August consumer price inflation to a 10-year high of 6.5 percent, the institute said.
The report, which was broadly in line with recent statements by officials at the institute and other government bodies, predicted inflation of 4.5 percent for all of this year and only a modest drop to 4 percent next year.
''Controlling excessive rises in consumer prices and asset prices, and easing inflationary pressure, should be the main task of macroeconomic adjustment policy in 2008,'' it said.
The institute forecast Gross Domestic Product growth of 11.6 percent this year, up from 11.1 percent in 2006, and said growth might ease slightly to around 11.0 percent next year.
Reuters DKS VP0604