World Bank sees higher China inflation, growth uptick

The World Bank sharply raised its forecast for China's inflation, saying it expects consumer prices to rise 7.0 percent this year, up from 4.6 percent projected in February.
The bank also nudged up its projection for gross domestic product growth in 2008 to 9.8 percent from 9.6 percent, because new data revealed a stronger service sector adding to the already robust economy.
In a quarterly economic update, the bank's Beijing economists said inflationary pressures required China to maintain a relatively tight monetary policy, relying instead on higher spending to cushion the global slowdown if it turns more serious.
The bank also noted an apparent rise in speculative inflows chasing a higher yuan, suggesting that Beijing could tighten capital controls while mulling greater exchange rate flexibility and even a one-off appreciation. (Reuters)