Inflation is part of the growing process. As income grows, living cost will increase. You can't have an US income and China cost. Would you want the farmers and workers who represent 80% of the population to have stagnant income forever? 5-6% of inflation should be the norm for China. The important thing is to direct investment where it is needed. Like more investment in agriculture and energy. Crack down on housing speculation. Speculators should not be allowed to have more than two units in China. Don't borrow the monetary policy from US. They have failed in the US and less suited for China. Greenspan and Ben are two of the worst FED chairmens in the history of US.