China should raise its 2010 inflation target to help ease pressure on Beijing let the yuan appreciate, a government think tank has said, according to state media Tuesday.
Lifting the target to four percent from three percent would improve farmers' incomes and alleviate excessive liquidity, the Shanghai Securities News reported, citing the Chinese Academy of Social Sciences.
The hike would also help create a more suitable environment to push ahead with reforms on pricing of resources, the institute said in a report on the nation's economic status.
The US and European governments have repeatedly butted heads with Beijing over its currency, claiming it is undervalued by as much as 40 percent, making Chinese exports artificially cheap.
Inflation has been picking up in recent months, rising at the fastest pace in nearly two years in August, as food prices rose due to severe floods and unusually hot weather that destroyed crops.
The academy forecast the inflation is likely to peak in the third quarter and then fall back until the first half of 2011. Consumer prices would rise three percent in 2010 and 3.2 percent the next year, it said.
China will next week unveil key economic data for September, including consumer price index, third quarter growth, retail sales and industrial production.
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