Expert says no serious inflation facing China

2007-12-26 22:44:11 Shanghai Daily

ALTHOUGH prices of food, housing and shares are rising, "China will not face serious inflation," an official from a think-tank of the Communist Party of China claimed yesterday.

Zheng Xinli, deputy director of the Policy Research Office of the CPC Central Committee, told a press conference that price fluctuations were unavoidable but the forces that had driven up prices were dissipating.

Zheng said that China would resolve price increases for certain goods by increasing supply.

As the soaring price of pork, China's staple meat, has pushed up the consumer price index, the State Council worked out a series of policies to boost pork production.

"In the first half of next year, the positive effects of the policies will emerge," Zheng said.

His comments came in the wake of another rise in the pork prices in China, the world's biggest producer and consumer of the meat.

Prices for the meat rose for an 11th week as demand and higher livestock farming costs thwarted government efforts to boost supply and tame inflation.

Domestic prices for pork would remain high due to increased consumer demand at the year's end, the Ministry of Commerce said in forecast on Wednesday.

Food prices gained 0.3 percent in the seven days to Sunday, led by meat, cooking oil and grain, the Ministry of Commerce said yesterday. The wholesale price of pork, a staple in Chinese diets, gained 1.4 percent to 20.97 yuan (US$2.86) a kilogram, up 53 percent in the past year, according to the ministry's Website.

The government, concerned about inflation and social stability, has tried to bring down pork prices by selling grain from reserves and subsidizing insurance against pig diseases. Food prices in the world's fastest-growing major economy rose 18.2 percent in November, spurring a jump to an 11-year high of 6.9 percent in the CPI.

The government offered farmers subsidized insurance for sows to boost production of pork following an outbreak this year of blue-ear disease, an infection characterized by reproductive failure of sows and respiratory problems of growing pigs.

Commenting on concerns that pork supplies might exceed demand early next year, Zheng said China was building cold storage facilities. Once market prices for pork had fallen below cost, the government would increase pork reserves, so as to ensure a stable market.

On other matters, he said government will also build and sell more low- and mid-priced apartments to control current excessively high housing prices.

He said efforts would also be made to maintain a stable stock market, including increasing the number of listed companies and encouraging state-owned enterprises that had already listed overseas to also list domestically.