MNI BRIEF: China Banks Should Ready For Inflation Pressure

China's banking industry should take precaution to control risks as companies are facing greater impact of higher upstream costs with producer price inflation likely to hit 10% in June, Yu Xuejun, a vice-ministerial official at the China Banking and Insurance Regulatory Commission told the Caixin Summer Summit on Thursday.

Although the consumer market has seen limited price increases to date, the Producer Price Index (PPI), or factory gate inflation, has already accelerated to 9% in May and may head higher next month, which will put pressure on CPI, said Yu, adding that some export companies in coastal areas are turning down orders so to avoid incurring losses.

Yu also noted that the global economy is in a sensitive period, with macro policies likely to be changed at any time, and it will be difficult to return to normal in the short term.