Outlook for 2011-15

• There is little likelihood of significant political reforms in the forecast period, as China's rulers will concentrate on maintaining stability during the transition to a younger generation of political leaders in 2012-13.
• Strained relations between China's majority Han ethnic group and Tibetan and Uighur minorities are unlikely to improve. The government will maintain a hard line against separatism, thereby stoking wider ethnic grievances.
• The economy performed unexpectedly strongly in 2010, with real GDP expanding by 10.3%. Growth will slow to an average of 8.4% a year in 2011-15.
• Wage inflation will remain rapid in the forecast period, helping to support private consumption. But growth in investment, notably in the property sector, will decelerate from its 2010 rate.
• China will continue to come under strong pressure to allow a more significant increase in the value of the renminbi. However, the currency is likely to appreciate only slowly against the US dollar in 2011-15.
• Consumer price inflation is expected to remain a major policy issue in 2011 as the government struggles to contain strongly rising food prices. Inflation is forecast to average a manageable 4.1% in 2011­15.

Monthly review

• In February it was revealed that the long-serving head of China's Ministry of Railways, Liu Zhijun, had been removed from his post in a suspected corruption probe.
• China raised policy interest rates and bank reserve requirement ratios again in February as the People's Bank of China (PBC, the central bank) sought to head off potential inflationary pressures.
• Year-on-year consumer price inflation accelerated to 4.9% in January, from 4.6% in December. Food remains the main driver of inflation, but the rate of increase in housing costs is also picking up pace.
• Producer price inflation jumped sharply in January, to 6.6% year on year, from 5.9% in December.
• Water resource issues replaced agriculture as the focus of the first policy document published by the State Council (China's cabinet) in 2011-a document sometimes seen as highlighting the government's main priority for the year.
• China's imports surged by 51.2% year on year in January, reaching US$144.3bn. Exports in the month rose by 37.6% year on year, to US$150.7bn. This caused the monthly trade surplus to fall to US$6.5bn.