On December 15, 2010, the Chinese Academy of Social Sciences (CASS) issued its blue book on society. The book pointed out that, while China’s economy is developing rapidly, it also faces challenges and social issues. The problems are particularly striking in the areas of income distribution, labor relations, and prices for goods and housing. The book summarized the five major issues and challenges for China’s social development in 2010. They were: 1) The economy is entering a new phase; the development model needs to be transformed. 2) Conflicts in labor relations have become evident; a new generation of farm workers has become the focus of attention. 3) Reform in the distribution of income has met heavy resistance; be aware of the “trap of middle-income nations.” 4) “Land urbanization” has become hot again; be aware of damaging farmers’ interests. 5) The semi-urbanization problem is very serious; villages are shrinking in some areas.

Source: China News Agency, December 16, 2010
http://www.chinanews.com.cn/gn/2010/12-16/2724961.shtml

Xinhua quoted several government researchers, stating that China would not increase interest rates to counter inflationary pressure, since doing so would most likely attract international “hot money” to China and hurt China’s economy. Instead, China will rely on lending controls, such as increasing the ratio of lenders’ cash reserve requirements. On December 10, the Bank of China increased the reserve requirement ratio by another 50 basis points, which is the third increase in one month and the sixth in 2010.

In November, China’s CPI increased 5.1% over the same month in 2009. The CPI for food increased 11.7% over the same period last year. Since the global financial crisis began, China has added 17 trillion yuan (U.S. $2.6 trillion) in new loans and the supply of renminbi has reached 70 trillion yuan (U.S. $10.6 trillion).

Source: Xinhua, December 14, 2010
http://news.xinhuanet.com/fortune/2010-12/14/c_12879617_3.htm