Liu Shucheng, Director of Institute of Economics of the CASS, expects CPI growth to taper off in the latter half of the year due to the government's supply-side measures, tighter market liquidity and falling commodity prices in global markets.

Compared with other emerging economies, China's inflation situation is much less severe, said Yao Jingyuan, chief economist of the NBS. In May, India reported a 9-percent inflation rate.

"China is able to hold serious inflation at bay thanks to deep reserves of grain," he said.

Li Daokui, member of the Monetary Policy Committee of the People's Bank of China and Director of the Center for China in the World Economy at Tsinghua University, is also optimistic about inflation prospect in China.

"Thanks to industrial overcapacity, the country is less likely to experience the double-digit inflation rate it did in the late 1980s," he said.

"If international crude prices stabilize, China's CPI may ease back to 4-5 percent later this year and stay at 3-5 percent over the next few years," said Li.

"Government measures to curb inflation are already taking effect," said Guo Tianyong, Director of the Research Center of China's Banking Industry under the Central University of Finance and Economics.

Given that food prices are pushing up CPI, supply-side measures should be more effective to fight inflation, he said. "But it is necessary to avoid the over-use of administrative price control measures, and allow the markets to play a bigger role."

Zhuang Jian, chief China economist with the Asian Development Bank, said it would also help if China accelerates the yuan's appreciation and makes imported goods more affordable for domestic consumers.

Sheng Laiyun, spokesman of the NBS, expected inflation fears to ease in the remainder of the year.

"China has reaped a bumper harvest of summer grain, and an economic slowdown would also cool demand and soothe upward pressure on consumer prices," he said. "Globally, international commodity prices have been dropping, which helps curtail imported inflation."

Sheng also said the government will enhance subsidies to low-income groups and cushion the impact of inflation.

Global effect

The Chinese economy is losing some momentum, sending ripples throughout the world.

The international credit rating agency Standard & Poor's (S&P) even warned in June that a sudden slowdown in China may lead commodity prices to fall 50-75 percent from current levels.

Ivan Glasenberg, CEO of Glencore, a multinational mining and commodity trading company headquartered in Switzerland, said high consumer prices in China and the country's moves to curb inflation had dampened global demand for commodities.

But Glasenberg still painted a positive medium-term outlook, stating that the effects of China's monetary tightening would be short lived.

"These are short-time ebbs which we see from time to time," he said. "We still believe in the underlying strong fundamentals, with demand continuing to grow in Asia, particularly China and India."

In fact, as China rebalances its economy toward slower but more sustainable growth, the shift is benefiting global economies.

The country is seeking to widen domestic demand and encourage imports, a remarkable boon for its trade partners. In the first half of 2011, China's imports totaled $829.37 billion, up 27.6 percent from a year ago. The trade surplus in the first half of 2011 continued shrinking, and stood at $44.93 billion, a decrease of 18.2 percent from a year ago.

Despite the moderation in domestic growth, China still remains a powerful contributor to global economic growth, said Zheng Xinli, Vice Chairman of China Center for International Economic Exchanges.

China is embarking on a greener path of growth, presenting opportunities for overseas companies in the renewable energy and environmental protection sectors, said Zheng.

China's massive urbanization will continue creating buoyant demand, injecting fresh life into the world economy, he said.

"Meanwhile, China has been the largest foreign holder of U.S. Treasury securities, which are vital for the United States to fund its increasing budget deficits," he said. "Chinese companies are also quickening investments overseas, providing jobs and tax revenues for target countries."