Chinese government announces freeze on prices which it controls, for rest of year

International
Chinese government announces freeze on prices which it controls, for rest of year
By Finfacts Team
Sep 19, 2007, 10:56

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Chinese President Hu Jintao and Li Changchun, member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, meet with national moral models at the Great Hall of the People in Beijing, capital of China, Sept. 18, 2007. In March last year, a nationwide morality drive was launched in the form of Hu's list of eight honours and disgraces amid worries that some Chinese people have lost their direction and have blurred the difference between right and wrong during the country's rapid economic development. The Eight Honours and Disgraces are as follows: Love the country, do it no harm; Serve the people, never betray them; Follow science, discard superstition; Be diligent, not indolent; Be united, help each other, make no gains at other's expense; Be honest and trustworthy, do not sacrifice ethics for profit; Be disciplined and law-abiding, not chaotic and lawless; Live plainly, work hard, do not wallow in luxuries and pleasures. Photo: Xinhua

The Chinese government on Wednesday announced a freeze on prices, which it controls - in such areas as land, transport, utilities and fuel - for the rest of the year, in the latest signal of its concern about rising prices.

The government also said that market prices should be contained during the forthcoming Mid-Lunar holiday period, begining on September 25th. Otherwise, it would have a direct impact on the country’s "development, reform and stability," a statement said.

The government also said in its statement that was issued by six ministries, that ensuring stable prices would also create favourable conditions for the opening of the ruling Communist Party’s five-yearly congress on Oct. 15th.

The statement said that local governments should raise minimum wages as soon as possible to make up for inflation, which rose 6.5 percent in the year to August, the highest level since December 1996.

The big jump in the price of pork this year has concerned Chinese leaders who fear a social backlash. The price of wheat is trading at a record on world markets because of weather conditions and drought.

On Monday it was reported that the retail price of pork in 36 big and medium-sized cities in China fell slightly for the fifth week in a row amid the government efforts to guarantee pork production and supply, sources from the National Development and Reform Commission (NDRC) said according to State news agency Xinhua.

According to the NDRC's price supervision centre, the average pork price in the cities was 25.56 yuan ($3.5 US) per kilogram last week, 1.08 percent lower than the week before and 8.39 percent lower than Aug. 9, the highest ever.

The pork price hike in China was in line with international prices, said Patrick Moore, president of the International Meat Secretariat (IMS), who was speaking at the fourth IMS World Pork Conference in Nanjing from Sep. 14 to 17.

Moore said the main reason for worldwide pork price rises was the increasing demand and pig-raising costs. Although China consumed half the world's pork output, the temporary price hike would not seriously affect the market.

Prices would stabilize early next year, as the government made efforts to guarantee farmers' incomes and benefits, said Deng Fujiang, vice chairman of the China Meat Association .

The retail prices of beef, mutton and chicken rose slightly last week by 1.28 percent, 1.35 percent and 1.29 percent respectively, while eggs were down 0.41 percent from the week before.

The New York Times reported last June that Chinese officials offer several reasons for the high pig prices. The cost of animal feed has risen by one-quarter in the last year, partly because more corn is being made into ethanol and partly because more prosperous workers are eating more meat, which requires more animal feed.

The cost of pig veterinary medicine has soared. Some pig farms, shut down because of low prices last year, were unprepared for strong demand this spring. And outbreaks of disease have killed many pigs, though no reliable estimates of how many are available.

Statistics from the agriculture ministry showed that prices for live pigs rose 71.3 percent in April compared with the same month a year earlier, while pork prices climbed 29.3 percent in April from March.