Price hikes 'serious'

10:29, December 10, 2010      

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The Central Economic Work Conference, the most important annual conference on the economy that usually offers predictions about policy trends in the coming year, is expected to convene Friday in Beijing.

"Controlling inflation while maintaining stable economic growth" is expected to be the key theme of the conference at a time when the country is grappling with mounting pressure from price hikes.

A survey conducted by China Central Television showed that 73 percent of 100 economists and entrepreneurs said China's current inflation is relatively serious and 15 percent felt it very serious.

From agricultural products including grains, sugar and cotton, to mineral resources, consumers feel that most products are now more expensive.

The China Commodity Price Index (CCPI) this year surged 10 percent, with minerals leading the rise, and another 10 percent hike is expected next year, according to the Blue Book of China's Economy released Tuesday by the ChineseAcademy of Social Sciences (CASS).

Higher prices for basic food item such as sugar, salt and edible oils have forced many to hoard food.

Economist Gu Shengzu, a member of the Standing Committee in the National People's Congress, warned last month that inflation expectations would lead to economic fluctuation and cause panic especially among low-income people.

On November 22, students at a high school in Liupanshui, Guizhou Province, stormed the cafeteria, smashed windows and overturned tables, in an apparent protest against the rise of meal prices at school.

China has seen five periods of inflation since the reform and opening-up policy in 1978, according to China Finance, a magazine run by People's Bank of China. They surfaced in 1980, 1985, 1987-89, 1993-96 and 2007-08, respectively.

The Blue Book by CASS projected that the Consumer Price Index this year will be 3.2 percent, higher than the 3 percent target set by the government.

The government has implemented policies to contain inflation, including raising interest rates, ensuring supplies of vegetables and providing more subsidies to families in need. The Political Bureau of the CPC Central Committee announced December 3 a shift in the country's monetary stance to "prudent" away from "appropriately loose," a policy in place since late 2008.

However, Qing Yi, chief economist at Hengtai Security Co, argued the "polarization of rich and poor" is the fundamental reason for the inflation.

"It shows that people's purchasing power is decreasing, and the low-income residents in rural and western regions suffer most," Qing told the Global Times Thursday.

Source: Global Times


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