Government and Policy

Govt announces guidelines to tame price rises

Updated: 2010-11-17 19:22
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BEIJING - China's State Council Wednesday announced price control guidelines to reassure consumers facing rising inflation and urged local authorities to offer temporary subsidies to needy families.

Efforts would be made to ensure market supplies, improve subsidy systems, make price controls more targeted and strengthen market supervision, said a statement released Wednesday after a State Council, or Cabinet, executive meeting presided over by Premier Wen Jiabao.

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The statement said the government would further support agricultural production to maintain steady growth of agricultural output and put state reserves of grains, edible oils and sugar on the market when necessary in order to guarantee supplies.

The authorities should keep a close eye on winter vegetable production to increase supplies through the winter, take measures to cut delivery costs of agricultural products, and increase cotton transportation from Xinjiang Uygur autonomous region.

They should also continue to reduce prices of power, gas and rail transport for chemical fertilizer producers, ensure coal supplies for power generation companies and increase production of oil, especially diesel oil, to guarantee a sufficient supply.

Government departments and local governments should offer temporary price subsidies for the needy, and increase allowances for needy students and student canteens. Social welfare benefits should be aligned with price levels and basic standards of social welfare should be gradually raised.

The authorities should adjust prices promptly and moderately, keep natural gas prices stable and impose temporary price controls on important daily necessities and production materials when necessary.

In addition, the government would strengthen market supervision and crack down on hoarding or speculation in major agricultural products, said the statement.

China's consumer price index (CPI), a main gauge of inflation, soared to a 25-month high of 4.4 percent year-on-year in October.

The Ministry of Commerce (MOC) announced Wednesday it would auction 200,000 tonnes of reserve sugar on November 22 in a bid to guarantee market supplies and curb price rises, the second such auction during the 2010-2011 processing season.

In South China's Guangxi Zhuang autonomous region, the country's largest sugar producing area, sugar prices hit a new high of 7,600 yuan per tonne on November 8, up 74.7 percent from the same period of the 2009-2010 season.

The prices of 18 types of vegetables in China for the week ending November 14 were slightly lower, down by 0.8 percent compared to the previous week, according to a weekly report by the MOC. However, on a year-on-year basis, the prices of 18 staple vegetables in the first 10 days this month were still significantly higher from a year earlier.

Meanwhile, prices of meat for the past week have been rising, the report showed, with prices of pork up 1.6 percent and mutton 0.5 percent. Prices of eggs also rose 0.9 percent, while rice rose 0.6 percent and flour 0.4 percent.

Chinese consumer confidence fell in the third quarter, the first drop after rising for five consecutive quarters, as the pace of inflation quickened, according to the National Bureau of Statistics (NBS).

The State Council's announcement regarding price control guidelines came after Chinese equities fell for a second day running Wednesday as investors feared prospects of higher interest rates and inflation control policies would hurt earnings.

The government's top concern was to control inflation, judging from moves to raise bank reserves ratios and increase interest rates, said Yu Junwei, an analyst with Shanghai Shiji Investment Advisory Co Ltd.

Zhou Xiaochuan, governor of the People's Bank of China, said Tuesday the authorities would tighten controls on liquidity.

China's central bank raised benchmark interest rates last month and ordered banks to set aside more reserves last Wednesday in its latest effort to rein in liquidity.