Dongfang Daily: This round of inflation has lasted since the middle of last year, and consumer prices have been climbing monthly. What are the major reasons for the year-long inflation?

Ren Yuling: As many scholars have agreed, the inflation has been caused by both internal and external reasons. From the international perspective, the U.S. subprime mortgage crisis, the consumer price surge in countries like Britain, the United States and Japan, international crude oil price hikes, Viet Nam's economic crisis and the hot money influx into China have all contributed to China's inflation. Domestically, Chinese currency appreciation, local government investment sentiments, resource shortages, the impact of natural disasters and rising home prices have been major triggers.

Of all the reasons, the property industry is the culprit in this round of inflation. The property industry is large in scale and has a far-reaching impact on other industries. Property industry development pushes 65 industries from steel to painting materials. For instance, rising steel prices are closely related to real estate market development. Our country's iron and steel output soared four times to more than 400 million tons in the past decade, which lifted the demand for iron ore whose price naturally increased because of enormous demand.

There is no industry that can be as influential as the real estate industry. The surge in home prices unavoidably brings about a price surge in raw materials such as coal, electricity and oil.

When home prices become increasingly expensive, houses become hot investment products. In recent three years, people who invested in properties in Shanghai, Beijing or Guangzhou could get two or three times more profit. The high yields quickly lured domestic and international speculators. When I visited Australia and New Zealand in recent years, nine of my 10 tour guides and translators had purchased homes in China, and one of them even had bought three.

This round of inflation started to pick up momentum last year and is going along with the property market boom. Although China's housing prices have risen in the past decade, the biggest price surges happened in 2006 and 2007. In 2004, the average home price in Beijing was 5,050 yuan ($740) per square meter, but it skyrocketed to 14,000 yuan ($2,049) per square meter in 2007, which directly led to an overall consumer price surge.

Some people contend that housing prices are going down with shrinking volume, and if the government does not take measures to stabilize the property market, overall macroeconomic safety will be seriously affected. Is it the right time to suppress the real estate industry?

I have thought of this question over and over again. Needless to say, property developers are very adept at propaganda and know exactly how to manipulate publicity. They hire a large number of so-called scholars and experts so that these people can use their influence to entrap potential buyers. In the first five months of this year, property development space grew 24.9 percent, and residential property development space surged 26.6 percent. Under such cheerful circumstances, they hired those experts to grieve for them, attempting to force the government to let go of its stringent monetary policy. Their greediness is endless and must be brought under control.

If housing prices continue to soar, the property market will soon crash. As far as I know, home sales in some big cities have dropped. Take Beijing for instance. In the first five months, commercial housing space for sale decreased 46.1 percent, while residential housing space fell 48.8 percent. The sharp drop showed last year's housing price surge had surpassed market sustainability and that the bubbles needed to be cleared. Otherwise, ordinary citizens could not sustain such high home prices.