China's Wen stresses need to bat back inflation

China will increase supplies of goods to keep consumer prices stable, Premier Wen Jiabao told a cabinet meeting on Friday, solidifying the fight against inflation as a top priority for the new government.

"We must try to keep prices basically stable, and the key is to increase market supplies by all means," Wen told the first meeting of the State Council since the rubber-stamp National People's Congress elected the new government earlier this month.

"We must implement temporary price intervention on some key goods and services in line with the law," he said, according to a statement published on the central government's Web site (www.gov.cn).

Wen's comments signal Beijing's preoccupation with fighting inflation, which hit a nearly 12-year high annual pace of 8.7 percent in February. It is aiming for inflation of 4.8 percent this year, a task Wen earlier acknowledged would be tough to attain.

Wen added that China would maintain "basically stable" trade policies, but he did not elaborate.

Beijing, facing increasing frictions with its trade partners due to its large trade surplus, last year discarded a host of policies meant to encourage exports, in order to steer its economy more towards relying on domestic demand.

The government will also step up controls on fixed-asset investment, partly by limiting new projects in industries that use a lot of energy and are heavily polluting, Wen said.