According to the Blue Book of Commercial Sector, price levels are expected to stay stable in 2010 with the recovering global and domestic economies and better macroeconomic regulation. The Blue Book predicts that the consumer price index (CPI) will rise by around 3% yoy or lower in 2010, compared to the negative growth of −0.7% yoy in the previous year. It is also believed that China’s economic growth will exceed 9% yoy in 2010, higher than 8.7% yoy in 2009.

Against the backdrop of China’s economic recovery, there are several upside risks to inflation identified, including high inflation expectations, risks of excess liquidity, and rising global commodity prices.

To tackle the risks and maintain overall price stability, the Blue Book suggested that the government should (1) further improve macro-regulation and better manage market expectations; (2) strengthen the support for agriculture, especially grain production; (3) push forward the reform of resources pricing mechanisms in a bid to enhance resource conservation and environmental protection; (4) stabilize or reduce prices of goods and services that affect people’s livelihood; (5) improve the state reserve mechanism and the mechanism of fine-tuning the export and import of important commodities; (6) enhance government’s capability of monitoring and analyzing market prices, improve the price warning mechanism, and set up  emergency plans.

The government policies introduced to regulate price levels were proved to be successful in 2009. Overall, the CPI was down slightly by 0.7% yoy in 2009, in contrast with 6.6% growth in 2008. Of which, the urban CPI dropped by 0.9% yoy, while the rural CPI declined by 0.3% yoy.