Li Yizhong: Industry should do more to fight inflation

By Ren Zhongxi
0 CommentsPrint E-mail, March 5, 2011
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China's former industry minister Li Yizhong talks to the press.

China's former industry minister Li Yizhong talks to the press. []

China's former industry minister Li Yizhong said Friday that China's industrial sector must shoulder its responsibilities in the fight against inflation.

Speaking on the sidelines of the Fourth Session of the 11th Chinese People's Political Consultative Conference (CPPCC), on March 4, 2011, the former minister for Industry and Information Technology blamed rising prices on breakneck development and poor cost control.

According to Li, who is currently vice director of CPPCC economic committee, the price of fuel, power and raw materials rose by 9.6 percent last year. The high cost of raw materials pushed up the Producer Price Index (PPI) by 5.5 percent. The knock-on effect was that the Consumer Price Index (CPI) rose 3.3 percent in 2010, reaching a high of 5.1 percent.

"These three figures demonstrate how upstream industry affects price levels," Li said.

Li said the underlying reason was breakneck development and unchecked construction projects, resulting in oversupply in many sectors.

"There are many things we can't control, such as the chaos in North Africa which has caused global crude prices to rocket. But there is a lot we can do to control ourselves. Generally speaking, many manufacturing companies are performing badly when it comes to exploring alternatives, saving energy and reducing emissions. This will continue to put pressure on the PPI and consumers will continue to suffer from rising prices," Li said.

Li admitted that the government had tried hard to control inflation. As rises in food prices and houses prices account for a large chunk of the CPI, the government has been pushing agricultural development and ensuring supplies of farm produce by releasing government reserves and reinforcing market supervision.

But Li underlined that industry must shoulder its responsibilities. "We could restrict excess production capacity, stop investing in energy-intensive and highly polluting industries, and cut costs to ease the pressure on the CPI. Right now, we are not doing enough on this," he said.

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