China's consumer price index (CPI), a main gauge of inflation, saw a year-on-year rise of 3.4 percent in August, the highest in 2010, but that figure will decline for the rest of the year, said Wang Qing, Morgan Stanley's chief economist in China, in a September 3 report predicting macroeconomic trends.

Wang attributed the CPI rise in August to a rise in food prices and the stability of prices for non-food products. He said the rise in the international price of wheat would not create inflation in China due to the country's abundant stores of grain and high sales volume of wheat, although domestic wheat tends to go up in price recently. The price of pork has begun to rise since June, the report said.

As for trade, Wang estimated that exports rose 35 percent in August compared with the same period last year. Imports rose an estimated 25 percent, 1.8 percentage points higher compared with the rise in July, while the trade surplus in August was expected to reach $30 billion.

In addition, the People's Bank of China, the country's central bank, is continuing to recover liquidity in the open market, indicating that the central bank has maintained a prudent attitude in the midst of inflation uncertainty.

Wang expected that additional loans in August alone would reach 500 billion yuan ($73.5 billion). The broad money supply (M2), which covers cash in circulation and all deposits, increased 17.5 percent compared with 17.6 percent in July, basically maintaining stable growth.

(Source: Caijing.com)