China's price control policy benefits consumers, growers

15:11, November 19, 2010      

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While the United States is still grappling with its economic recovery by pumping 600 billion dollars into the market, China announced new measures to tame price gains which were mainly caused by excessive liquidity.


China's State Council, or the Cabinet, pledged Wednesday that the government would make more efforts to stabilize commodity prices, ensure the supply of vegetables, grain, edible oil, sugar and cotton and crack down on speculation in agricultural goods.

The government may also impose temporary price controls on important daily necessities and production materials, when necessary, to counter the inflation that has accelerated to a 4.4 percent annual pace in October.

"The measures will benefit both the consumers and producers," Li Guoxiang, an analyst with the Rural Development Institute of the Chinese Academy of Social Sciences (CASS), told Xinhua Thursday.

"The government vowed to increase production of oil, especially diesel oil, to guarantee a sufficient supply, which will help cut delivery costs of agricultural products, leading farm produce prices to fall," Li said.

Also, diesel shortages hit China this winter as international oil prices jumped and domestic factories used extra fuel to power their generators. Some gas stations in east and south China ran dry and drivers struggled to get their trucks fueled in early November, pushing up delivery costs of agricultural products.

Also, data from the Ministry of Commerce showed the prices of 18 types of vegetables in China, including cabbage, potato and cucumbers, rose 62.4 percent year on year in early November, while prices of garlic and ginger jumped 95.85 percent and 89.5 percent, respectively, from one year earlier.


However, China's price control measures dragged farm produce prices down faster than expected. "Prices of Chinese cabbage fell to 0.5 yuan per kilo. Prices of other vegetables like celery and carrots dropped 30 percent compared with Wednesday," Wang Manyin, a 68-year-old citizen in Jinan, east China' s Shandong Province, said while visiting a supermarket.

Wang and her husband together earned 1,400 yuan per month. "As a low-income earner, I really hope the measures could drag prices of agricultural products down a bit," she said.

The authorities said in Wednesday's statement it would offer temporary price subsidies for the needy and increase allowances for poor students as well as all students' living expenses. Further, social welfare benefits should be aligned with price levels and basic standards of social welfare should be gradually raised.

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