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Chinese vendor organizes maps price at a supermarket in Hefei, is China Photo: AFP/Getty Images

5 1Pc annualised rate of inflation, maximum 4 4pc in October, led by an 11 7pc jump in food prices, the Statistical Office national Chinese (NSB) said.

Economists said the highest expected, they should translate into an "aggressive tightening" China's money supply, would weigh on investors when global markets reopen Monday.

Inflation figures follow more strong commercial data Chinese expected last Friday which showed exports increased from 34 9pc-on-year in November and imports jumped by 37 7pc. Bank of China, the China's Central Bank has responded to rising by increasing the ratio of obligation to reserve for banks by 50 basis points.

Neumann, Fred's Asian economic research at HSBC in Hong Kong, said he expected the market to react to the inflation rate. "It raises the more aggressive risk of clamping and which will weigh on the sense of the world market in the short term", he said.

"The risk to the rest of the world and the United Kingdom is [Chinese] growth could slow, which could hit financial confidence worldwide, as China is considered the last locomotive driving mess it finds itself in."

Mr. Neumann has declared a Chinese them higher inflation would feed through to higher prices for products manufactured in the UK "in the next year or two" stores, just as Chinese raw materials such as cotton, this year already increased the cost of clothing.

Statistics on official trade for October, published last week, showed that China is second most important source of the country of import.

"If China raises prices in manufactured products which means prices higher for Western economies," said Neumann "" "" "China is already significantly pushing up world prices and which will be felt in the pockets of UK consumers.

Economists expect to raise loan and deposit rates, the responsibility of the Central Bank of China as it did in October, to fight against inflation. However, Wu Xiaoling, a former Deputy Governor of the Bank said yesterday that it was not possible because of the risk to draw cash flow fuel inflation.

Mr Neumann said another tool for China to reduce its National Bank ready target for 2011, which is estimated at 7 billion yuan. "It can now be lower," he said.

But Mr. Neumann added that there is "a silver lining" Chinese higher inflation. "This means that China is going to lose some competitiveness, which means ultimately there somewhat in the end of the tunnel for Western manufacturers as they can compete on a lawn more level." It is a few years away, but I would say highest Chinese inflation is part of the global rebalancing. ?

The State Council, China's cabinet strives to curb food prices by initiating efforts to increase the production of vegetables and other basic products. Authorities crack down on hoarding and speculation, as say, are partly responsible for price increases.

The NSB also stated industrial output, an indicator of economic health, increased by 13 3pc in November of the previous year, while retail sales increased by 18 7pc, important to the Government's efforts to build domestic consumption to stimulate growth.

In contrast, UK consumer prices is supposed to have remained flat at 3 2pc in November, when the official figures are published on Tuesday.

Howard Archer, Chief Economist UK of IHS Global Insight, said he expected the ICC aboard up to 3 5pc in the coming months "due to higher oil and commodity prices".

Saudi oil Minister Ali al - Naimi said that was not necessary for an increase in oil production to a meeting of the Organization of the of petroleum exporting countries (OPEC) in Quito, Ecuador.

OPEC, which supplies about 40pc of oil in the world, has not changed since the end of 2008 quotas, when he announced the biggest ever cut its production as demand world collapsed. Crude oil rose above $90 per barrel, the week last for the first time since more than two years.

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BEIJING (Reuters) – Chinese pensioner Wang Li endured two chilly hours on a pre-dawn bus to Beijing's biggest wholesale food market to stock up on dried seaweed, one more food hit by inflation rippling across the country.

Explanations and forecasts for China's recent spike in food prices are as varied as the vegetables and fruit piled on thousands of stalls and trucks in the Xinfadi open-air market on the southwest outskirts of the national capital.

Wang said whatever the reason, the Communist Party government had a duty to set it right and ensure residents need not worry about eating their fill.

"If this continues, it could hurt social stability. People don't just complain about prices as such, it makes them more sensitive about corruption and the gap between rich and poor," said Wang, a grey-haired 60-year-old wearing the dark blue jacket that was a uniform for his generation of Chinese workers.

"The government should do more than just shout slogans. It has to protect farmers and workers and punish the speculators," he said.

"I came here because the food is about half the price of a supermarket," he said, with a woven sack of seaweed -- a popular ingredient for soups and stews -- and vegetables at his feet as dawn broke. "But it's a long ride, and that shows how hard-up ordinary people feel."

China's Communist Party leaders, jittery about even mild signs of public unrest in cities, are well aware of the concerns.

In recent weeks, Beijing has announced measures to douse price rise pressures after inflation jumped to a 25-month high of 4.4 percent in the year to October. Food costs rose 10.1 percent in the period, while non-food inflation was just 1.6 percent higher.

"These tomatoes are rising in price no matter what the government says," said Liu Jie, unloading crates of them in the Xinfadi market. "The cold weather will drive up prices."

The government worries not only about the dampening effects on economic growth. The country's history has plenty of stories of sharp price rises triggering unrest even the end of dynasties.

In 1988 annual CPI jumped 18.8 percent, magnifying discontent in the build-up to widespread anti-government protests in 1989.

Over two decades later, the end of the Party is nowhere in sight and its leaders want to ensure it stays that way.

Their recent inflation-fighting announcements, widely publicized by state media, have been as much reassuring political showmanship as policy craftsmanship.

"In order to truly protect the fundamental interests of the broad public and maintain social harmony and stability, all areas and all departments must fully grasp the importance and urgency of stabilizing market prices," the State Council, or government cabinet headed by Premier Wen Jiabao, said over the weekend.

Wen, who was a central government aide in the late 1980s, put it more directly earlier this year.

"I've grasped from all my years of political life that there are two problems which can threaten social stability and even the steadiness of the government. One is corruption, and the other is prices," he told an online discussion in February.

Wen said he checked on prices of rice, flour, pork, and vegetables every day. "I know prices are bound up with our lives," he said.

PLENTY OF VEGETABLES, PLENTY OF REASONS

Wen's challenge is that those prices are also bound up with China's increasingly complex market economy, which does not respond obediently to political commands.

In the Xinfadi market, merchants shouting in the accents of China's rural heartland offered a rainbow of explanations for the recent price rises.

Some blamed growing exports, especially to South Koreans hungry for cheap Chinese cabbage to make kimchi. Others blamed bad weather, although there has not been much of it this year. Some said the weather had been too cold, others said too warm.

Only one of dozens of merchants interviewed offered the kind of explanation that China's officials might like to hear.

"The papers say it's because the U.S. dollar has depreciated. They're printing money like it's dirt," said Liu Jing, a whiskery man who had peddled a three-wheel cycle to the market to restock his small stall with mushrooms.

Wholesalers who trucked vegetables and fruit from farming provinces argued more plausibly that rising costs for fuel, fertilizer and the plastic sheeting used to protect many crops are feeding through to food prices.

"We're selling more expensive because we're buying it more expensive," said Li Zhongde, who had brought two trucks loaded with garlic buds from eastern Shandong province, a day's drive from Beijing.

"The transport costs are huge. A truckload doesn't earn more than a pittance," he said. "You pay more for fertilizer, plastic, water, fuel. It all adds up and someone has to pay for it."

Li had a hard time persuading customers, some of them reluctant to pay 7.4 yuan ($1.1) a kilo for garlic buds.

Numbers suggest Li's explanation is right.

Last year, labor costs to produce and supply vegetables sold in big cities rose 11.5 percent and land costs by 17.7 percent, according to statistics published by the National Development and Reform Commission, a policy-setting agency that also monitors prices.

More recent statistics are not available, but rises in fuel costs and the squeeze on land as urbanization spreads may have boosted costs this year.

DON'T PANIC

Li and other merchants doubted the government's drive to hold down prices would have much effect in coming months, a time when cold and the approach of Lunar New Year banquets usually push up some food prices.

But the government had no need to panic, said one merchant selling cabbages for 0.8 yuan a kilo, which he said was about double last year's price. He would not give his name.

"Even if they don't like it, people still have to eat," he said. "They'll complain, and be more picky about what they buy, but they won't rise up. Not for cabbage."

($1=6.64 Yuan)

(Editing by Don Durfee and Jonathan Thatcher)

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DETROIT – SAIC Motor Corp., China's largest automaker and a joint-venture partner with General Motors, is preparing to buy about $500 million worth of stock in the Detroit automaker, according to a newspaper website.

The Wall Street Journal reported Friday that SAIC is one of several foreign investors who could buy GM shares worth more than $1 billion as part of an initial public stock offering scheduled for Nov. 18. GM and SAIC wouldn't comment on the report when contacted by The Associated Press.

The U.S. government, which now owns 61 percent of GM but is looking to reduce its stake to around 40 percent in the IPO, has said the company would seek foreign investment as well as investment from the U.S.

Foreign investment in U.S. automakers and other companies is common.

Investment from sovereign wealth funds is considered good for a company because the funds tend to hold stakes for a long time, providing stability, the newspaper said. But it's also a touchy issue for the Obama administration, especially if some individual investors in the U.S. are unable to buy shares in the IPO.

U.S. taxpayers gave GM $50 billion to get it through bankruptcy protection last year. The automaker has repaid or plans to repay $9.5 billion, and the government hopes to get the remaining $40 billion back through the IPO and several follow-up sales.

A final decision by SAIC could come in the next few days, according to the newspaper, which cited people familiar with the situation that it did not identify.

GM and its investment advisers plan to release the stock's final price on Wednesday. The actual sale will take place on Thursday. The U.S. government and GM's other owners are selling 365 million shares of common stock. The IPO target price is between $26 and $29 per share. In addition, GM is selling 60 million preferred shares for about $50 each. The preferred shares will pay a dividend of 5.5 to 6 percent per year, a person briefed on the matter told The Associated Press Friday.

The first GM and SAIC joint-venture Buick factory opened in Shanghai in 1998. In December, the two companies announced plans for a venture to sell vehicles in India. In that deal, SAIC committed $350 million to the India venture, and GM agreed to turn over 1 percent of Shanghai GM, their main joint venture, giving SAIC a controlling 51 percent of the company.

SAIC and GM also have a highly successful joint venture in southern China, SAIC-GM-Wuling, whose minivans have been top sellers thanks to government policies encouraging sales of small, energy efficient vehicles.

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In the last five-year plan, China has set a target of 7 5pc annual, but considerably exceeded growth annually. Photo: EPA

Meeting key 202 leaders in Beijing China 2011 to 2015 roadmap discussed and agreed on the need for the second global economy to increase wages and improve its domestic consumption.

No target was defined for economic growth, but a release issued after the meeting said that China would seek to maintain "a stable and relatively fast growth economic" in the period.

In the last five-year plan, China has set a target of 7 5pc annual growth, but considerably exceeded it each year, the economy is expected to grow this year by 10pc autour.

"China has a large population and the main task is to maintain work f.l. ' economy to grow at a certain rate to achieve this goal, but it is clear that in recent years the Government has emphasised over these objectives and which is not sustainable," said Chen Xumin, Commercial Bank economist Nanchong.

"By saying that they want a fast-growing"relatively", they may serve will that GDP expand quite rapidly to ensure employment, but at a rate slower in the passé.Je can't guess the exact figure, but it is likely that there will be a slowdown in the next five years", he added.

Alistair Thornton, an economist at IHS Global Insight in Beijing, said that the Government may choose to notch his official objective of 7 5pc to 7pc.

"Warning of course is that they have exceeded the goal five last years some coup.Je think that they will be more rigorous and more stringent forward to try to keep more close to the official target."We will forecast 10pc growth this year, slow 9pc year next, and then 8pc, ", he said.

Hu Jintao, China's President, has promoted the idea of "inclusive" growth, which would be more Chinese share in prosperous countries wealth gap shrinks and workers enjoy higher wages and more great benefits.

China has one of the largest wealth disparities in the world, with the richest 10pc gain 65 times the average wage of the poorest 10pc, according to a study sponsored by Credit Switzerland Chinese economists.

"China will still increase the incomes of the population, improve the social construction and deepen the reform and opening," said the official statement of the meeting.

By increasing wages, China aims to expand domestic demand and officials have said that their intention to create "mechanism in the long term to increase consumer demand and accelerate the consumption.

China is facing increasing political pressure to curb its economy led by investment and promote domestic demand in order to re-balance the global economy and reduce the huge trade surplus of the country.

Full details of the five-year plan is not released until mars.Le plan is a document non-binding, which aims to provide a plan of action for the Communist Party's social and economic objectives.

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Investor billionaire currency has criticized China deliberately keeping the Yuan - currency - low to maintain cheap exports, which is hurting us competitors.

"Mr. Soros, Manager of hedge funds, best known as the man who broke the Bank of England" after fact one billion IRAP against the value of Sterling on Black Wednesday, in 1992, said China has created a system of "disproportion currency".

He has criticized China deliberately keeping the Yuan - currency - low to maintain cheap exports, which is hurting us competitors.

Mr. Soros said today the BBC Radio 4 that China had a "big advantage" program on international competitors, because it can control the value of its currency.

He said China could also affect the value of other currencies in the world because they have a "surplus chronic", which means that the Chinese have many foreign. ""They control not only their own currency, but in fact currency set global system," he said.

Written in the Financial Times, added Mr. Soros: "" whether or not it carries out China became a leader of the monde.Si it fails in the responsibilities of leadership, global currency system is liable to break down and take the global economy with it. ""

Central Bank Governor Zhou Xiaochuan China defended the second largest global economy, however.

"We have already begun to have rates of currency reform for a very long time...".[but]It is progressive..."It's good for an otherwise great economy can be dangerous," he told the BBC on the fringes of weekend meeting international monetary fund in Washington.

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