UPDATE 2-China says to stabilise prices, rein in property

* China’s cabinet vows steps to curb price rises

* To rein in overly rapid property price increases

* Planning agency says near-term inflation under control

(Updates with cabinet comment)

BEIJING, Oct 27 (BestGrowthStock) – China’s cabinet said on
Wednesday it will take further measures to stabilise consumer
prices and curb overly rapid increases in property prices in
some cities.

The comments signalled heightened official concerns over
the risks of price pressures and asset bubbles as capital
inflows rise, despite assurances from the country’s planning
agency that near-term inflation will remain under control.

Although the economy was performing as expected, Chinese
policymakers faced “increased external challenges” due to the
complex international environment, the State Council, or
cabinet, said in a statement posted on the government’s
website.

Stabilising prices of vegetables and daily necessities will
be high on the official agenda, the cabinet said after a
meeting about economic plans for the fourth quarter.

Companies found hoarding or manipulating prices of
agricultural commodities, mainly cotton, would be severely
punished, it added.

Global and domestic cotton prices have hit record highs
repeatedly in recent weeks, due partly to speculation.

“All regions, departments must seriousely implement various
controlling measures to resolutely curb the overly rapid rises
in property prices in some cities,” it said.

The government has taken a spate of measures this year to
rein in the red-hot property sector, including repeated
increases in mortgage down payments.

China’s consumer price index hit a 23-month high of 3.6
percent in the year to September, and analysts said high
inflation, coupled with rising asset prices, was a key reason
for the central bank’s surprise increase in interest rates last
week. [ID:nTOE63E07V]

China has set a 3.0 percent target for average inflation in
2010.

China’s benchmark bond and bill yields
(0#CNBMK=: )(0#CNTBBMK=: ) were mixed on Wednesday, with the yield
curve steepening amid lingering worries over high inflation and
possible further monetary tightening. [ID:nTOE69O041]

The cabinet also said that it would step up management of
local government financing vehicles, which officials say have
become saddled with a large pile of potentially bad debts.

Separately, the country’s planning agency said that
inflation will stay under control in the coming months, while
economic growth will remain strong as the private sector kicks
into gear.

“China’s economy (Read more about the fastest growing economy.) is gradually moving towards a
market-driven mode from a stimulus-driven one,” the National
Development and Reform Commission (NDRC) said in a statement on
its website.

Growth in the third quarter was 9.6 percent from a year
earlier. This was well above the government’s target of 8
percent for 2010, though it marked a slowdown from a 10.3
percent pace in the second quarter and 11.9 percent in the
first quarter.

Growth in some provinces may slow further, partly due to
increasing pressure from Beijing to meet environmental targets
for reducing emissions, the planning agency said.
(Reporting by Zhou Xin and Kevin Yao; Editing by Jacqueline
Wong & Kim Coghill)

UPDATE 2-China says to stabilise prices, rein in property