Inflation in China likely to break through the 8 percent mark

Even though the Chinese economy has growth by more than 10 percent in the first quarter the rate of inflation still remains close to an 11 year high, which keeps the pressure of the government to act in order to stabilize prices.

In order to cool prices, China has allowed the Yuan to appreciate by 4.4 percent this year against the dollar, that has had the effect of reducing import costs as well as the introduction of price controls and the requirement of banks having to increases their monetary reserves.

The Gross domestic product increased 10.4 percent compared to the first three months of 2007.

Though gain in the Yuan have failed to curb inflation, which is heading for its second straight month of 8 percent.

The country now faces a two pronged attack from both an economic slowdown and of overheating, as the worlds fastest growing economy in most showing its first real signs of struggle.

The central bank has been trapped as a result of reduced growth and growing inflation as it is difficult to manage, as the government targets of bringing inflation down to to 4.8 percent in 2008 look as if they are not going to met.

At the same time a sudden slowdown in growth will have major social implications.

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