Figures from the National Bureau of Statistics also indicate China's economy has remained stable for five consecutive months, easing the pressure on the central government in its fight against inflation. But experts say the government still needs to maintain economic stability in the second half.

Zhang Xinfa, Director of Macro-Economy Research Department of Galaxy Securities, said, "To achieve this goal, the central bank's tightening monetary policies, especially rules to curb excessive loans, should be relaxed appropriately in the second half. Some areas of the country are experiencing a capital shortage."

The central bank also said although growth of China's CPI has slowed, price hikes for staple commodities and international inflation will still bump up domestic production costs.

Plus with the still-rapid growth of the foreign exchange reserves, many experts say further macro-control policies should rely more on financial policies to fight inflation. For example, they encourage increasing subsidies to low-income people and farmers and raising export tax rebates.

(CCTV July 16, 2008)