Worried China tries to stem rising food prices
China moved today to control surging food prices that threaten to fuel unrest in the run up to the Olympics.
The government said it will pay farmers more for rice and wheat, trying to raise output.
Beijing has frozen retail prices of rice, cooking oil and other goods in an effort to rein in food costs that jumped 23.3% in February over the same month last year. But analysts warned that holding down prices paid to farmers would discourage them from raising production and easing shortages blamed for the increases.
The latest move is meant to “raise farmers’ enthusiasm for growing grain and make progress in the development in grain production,” the government said.
Prices started to rise sharply in mid-2007 as China ran short of grain and pork, the country’s staple meat.
The jump in food costs has hit ordinary Chinese hard in a society where families spend up to half their incomes on food, prompting unease among communist leaders about unrest just as they are hoping the Olympics will showcase China as stable and prosperous. Bouts of inflation in the 1980s and ’90s led to public protests.
Premier Wen Jiabao, China’s top economic official, said cooling inflation was the government’s top priority. He said Beijing hopes to hold this year’s overall inflation to 4.8% – equal to the 2007 rate – but outside economists say that looks unrealistic. They are forecasting full-year price rises of up to 6.4%.
Beijing has been prodding farmers to raise production by promising free vaccinations for pigs and other aid. Authorities say China has adequate food supplies. But devastating snowstorms that hit the south in January and February wrecked crops and disrupted shipping, adding to inflation pressures.
“China should increase policy support” and give “stronger signals to mobilise and protect the initiative of farmers to plant crops,” Wen said.
The snowstorms and a drought in the north-east will make it “harder to ensure grain supplies this year,” Xinhua said, citing Chen Xiwen, a rural planning official.
The communist government regards being able to meet most of China’s grain needs from domestic sources as a matter of national security. It operates a network of grain-buying offices and a grain stockpile. It has been releasing supplies to ease shortages.
