Further, the policy recognizes that high growth benefits the poor with a lag, while inflation adversely affects them instantly. Hence the current high-level of inflation is totally unacceptable, especially in terms of impact on inflation expectations. The monetary policy, however, reckons the complexities of the current bout of inflation.
•  Productivity growth appears to be slowing as windfall gains from earlier reforms have waned. But there remains a large gap between productivity in China and in advanced economies. That gap could be closed more quickly via additional reforms to allow a greater role for market forces in allocating productive resources. The authorities have expressed support for such reforms.