Will China's economy hop forward in Year of Rabbit?

The Chinese economy will be put on a diet in the Year of the Rabbit, as leaders in Beijing seek to trim inflation and curb an overheated real estate market in the months ahead.

In the days before the Chinese New Year, Premier Wen Jiabao announced that the government would put an increased focus on the "welfare of the people," taking steps to improve prosperity in the coming year.

Driving down prices and tempering the Chinese real estate market are two steps the government intends to take to help its people "live and work in peace and contentment, be free from anxiety, and live with greater happiness and dignity," Wen said in remarks reported by the state-run Xinhua News Agency.

While the Chinese government may believe that dangling these carrots to the public will win their support, experts say Beijing will have a much harder time actually bringing price increases and inflation under control.

Sameer Mathur, an assistant professor at McGill University's Desautels Faculty of Management, said the Chinese government is particularly concerned about the political impact of rising prices in the economy.

Inflation hit a two-year high in November, as part of longer trend that Mathur said has helped push prices up 10 to 15 per cent across the board in China, including for food.

China's National Bureau of Statistics recently reported that food prices "increased sharply" in 2010, with consumers paying 7.2 per cent more for their groceries in December than they did a year before. And that was twice the rate of increase in the general Consumer Price Index over the same time period.

In a telephone interview with CTV.ca, Mathur said when Chinese citizens realize their grocery bills are going to keep rising, "that's going to be when they are going to be really upset."

Read full article: CTV, February 6, 2010