Policy, crops will fight inflation: China viceFinMin

MADRID (Reuters) - China's Vice Minister of Finance said on Monday fighting inflation was a key priority and Beijing would tighten monetary policy and boost agricultural production to combat hikes in the price of food and oil.

"Fighting against inflation is a major task and certainly we will apply a lot policies," Li Yong said in a presentation to delegates at the Asian Development Bank's annual meeting.

"We will have tight monetary policy. You will see lots of action. We will reduce money supply, the investment ratio and other monetary policy instruments to met the (inflation) target.

"In fiscal policy, we will push ahead with agricultural production to allocate more resources to help farmers grow more grain," Li said.

China has an inflation target of 4.8 percent this year, but first quarter consumer price inflation surged to 8 percent.

Li was upbeat on prospects for this year's harvest and said the projections were that crops would surpass the average annual output of the last four years.

"We have little to do in terms of the global price hikes in grain and oil. But the good thing is our agricultural sector is strong. We have strong grain reserves and policies that support the agriculture sector."

China is targeting economic growth of around eight percent this year, though most economists expect it to slightly exceed that level. Li acknowledged it was possible that growth would exceed the 8 percent target.

"My projection is it will be more than 8 percent anyway," Li said.