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China sacrifices growth to satiate inflation dragon

If inflation is a dragon that must be slain, China’s Premier Wen Jiabao has shown he is willing to sacrifice a part of the country’s most vital asset to do so – growth.

Cutting China’s 2012 economic growth target to 7.5 percent at the start of the annual meeting of parliament a week ago says clearly that too rapid an expansion makes inflation too tough to contain, given the reforms needed to create widespread wealth.

That he did so in the week it was revealed that the annual rate of inflation  in February receded to a 20-month low of 3.2 percent, barely seven months after being twice that at a three-year peak of 6.5 percent, speaks volumes about the gravity of price risks.

(Source: CNBC)