Premier: inflation and social tensions put China in a 'critical period'

China's premier extolled the prosperity the Communist government has brought many Chinese yet sounded an alarm that inflation could derail the country's rapid emergence.

The mixed message Wednesday in Premier Wen Jiabao's annual policy address underscored the problems Chinese leaders face in meeting public expectations for ever-rising standards of living.

For the first time in over a decade, inflation is emerging as a signal danger at home, potentially eroding incomes of a fledgling middle class and inflaming tensions between the newly rich and the majority low-income workers and farmers. Overseas, the U.S. economic woes and trade friction with Europe could …