China set to battle price hikes
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The efforts mainly included imposing temporary price controls on important daily necessities and production materials when necessary, and urging local authorities to offer temporary subsidies to needy families.
In addition, the government will work to ensure market supplies and strengthen market supervision.
Local governments also unveiled specific measures intended to help people pressured by the higher cost of living. The city government of Changchun, capital of northeastern Jilin province, has announced it will hand out subsidies to more than 40,000 low-income households this month, distributing 50 yuan to each household.
Also, Mao Zhiming, an official with the city government of Taiyuan of northern Shanxi province, said the city will offer subsidies to low-income families each month beginning from the first month when the local consumer price index (CPI) rises above 3 percent and continuing until the third month that the CPI remains below 3 percent.
These steps were introduced after China's CPI, a major gauge of inflation, rose to a 25-month high of 4.4 percent in October. The increase was mainly pushed up by the 10.1 percent surge in food prices, which accounts for one-third of the basket of goods used to calculate the country's CPI.
Gao Fan, economics professor with Shanghai-based Fudan University, blamed speculation and excessive liquidity for surging prices of agricultural products in China.
He said that within the country, part of the speculative capital, which moved to the agricultural market from the property market after the government fought property speculation, pushed up prices of agricultural products.
Further, the U.S. has pumped excessive money into the global market with its new round of quantitative easing monetary policy, which has resulted in rising prices of commodities, including grain, and helped import inflation to China, he said.
"If the excessive capital can't be effectively diverged, the situation may get worse," he warned.
China has been moving to mop up excessive liquidity to combat inflation. The People's Bank of China, the country's central bank, announced Friday it would raise capital reserve requirements by 50 basis points for the banks for the fifth time this year in order to "appropriately control" credit and liquidity.
Also, Sun Lijian, professor with Fudan University, said the government should continue to speed up increases in grain supplies, curbing speculation and adding strategic reserves to rein in additional fast gains in prices.
Chinese Vice Premier Hui Liangyu, during his inspection tour to Guangdong and Fujian, lasting from Monday to Friday, called for greater efforts to ensure sufficient supplies of major agricultural products to satisfy increasing demand and help raise farmers' incomes.
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