China rolls out measures to fight inflation

0 CommentsPrint E-mail Xinhua, November 21, 2010
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The State Council, China's cabinet, announced Sunday a slew of measures to rein in rising commodity prices to ease the economic pressures on the people.

Local governments and departments are required to boost agricultural production and stabilize supply of agricultural products and fertilizer while reducing the cost of agricultural products and ensuring coal, power, oil and gas supplies, the State Council said in a seven-page circular.

The cabinet urged local departments to step up vegetable-planting efforts while stabilizing winter vegetable production and strengthening grain and edible-oil production field management to ward off supply shortages.

To reduce delivery costs, road tolls for vehicles transporting fresh- and live-farm produce will be forbidden from Dec. 1, the circular said.

The cabinet also ordered local authorities to continue to reduce the prices of power, gas and rail-transport for chemical-fertilizer producers while ensuring coal supplies for power generation companies and increasing production of oil -- especially diesel -- to guarantee sufficient supply.

Local governments must temporarily disburse subsidies to needy people and increase allowances for poor students and student canteens, the circular added.

Local authorities were ordered to establish coordinated social-security mechanisms that promise a gradual rise in basic pensions, unemployment insurance and minimum wages.

Local departments were also ordered to adjust prices promptly and to impose temporary price controls on important daily necessities and production materials where necessary.

Market monitoring will be intensified to clamp down on hoarding and speculation in major agricultural products, the circular added.

Chinese decision makers have made price controls a top priority, as the consumer price index (CPI), the main gauge of inflation, rose to a 25-month high of 4.4 percent in the 12 months to the end of October. The hike was mainly due to a 10.1-percent surge in food prices. Food prices have a one-third weighting in China's CPI calculation.

China has been moving to mop up excessive liquidity to combat inflation, with the latest move to target over-liquidity in the banking system.

The People's Bank of China, or the central bank, said Friday it would raise capital reserve requirements by 50 basis points for all the banks of the country for the fifth time this year to control credit and liquidity.

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