e-magazine
The Hot Zone
China's newly announced air defense identification zone over the East China Sea aims to shore up national security
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Science/Technology
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Hot Links

cheap eyeglasses
Market Avenue
eBeijing

Top Story
Top Story
UPDATED: March 5, 2008 NO.6 FEB.7, 2008
Coping With Inflation Pressures
The pressure of higher prices is a major problem confronting the Chinese economy
By LAN XINZHEN
Share

"We will be facing fairly great price pressures in 2008," said Xie Fuzhan, Director of the National Bureau of Statistics (NBS), on January 24. "Even if there are no new factors causing price hikes, the inertia from the rises in 2007 is still devastating."

According to the NBS' 2007 national economic report, the growth rate of the consumer price index (CPI), a barometer for inflation, surged 4.8 percent, up 3.3 percentage points comparing with 2006.

The Chinese Government had already predicted that there would be a major rise in the CPI, and it set the 2007 CPI growth rate target at 3 percent, double that of 2006. Judging by the current situation, the 4.8-percent growth far outpaced the government estimation, which was the highest growth rate since 1997.

Xie was worried about the CPI, but denied there was inflation. He claimed the rising CPI growth rate had caused inflationary pressure, but not inflation itself.

Many government officials and scholars held the same opinion, and believed the 2008 CPI growth rate would be noticeable.

The trend

China encountered serious inflation in five consecutive years from 1992 to 1996, after which the CPI maintained at a stable level for 10 years. In 1998, 1999 and 2002, CPI growth was negative. Between 2003 and 2006, the economy performed well with high growth and low inflation.

However, this trend changed in 2007 as the CPI surged considerably.

Xie said there were many reasons for the 2007 CPI surge. Generally speaking, the abundant money supply, especially the broad money supply exceeding 40 trillion yuan ($5.55 trillion), was one of the major reasons for CPI growth.

The trigger in this round of CPI growth was the pork price surge. Starting from June 2007, stimulated by pork price rise, the CPI growth rate exceeded 4 percent. The pork price rise was largely because of the extremely low price of pork in 2006, which led to the decrease in the number of pigs, particularly female pigs, in stall. Meanwhile, blue ear disease and other contagious diseases also reduced pig numbers. Rising grain and feed prices also contributed to the pork price rise, eventually leading to the overall consumer price surge.

Xie said rising international primary product prices also added pressure to China's CPI surge. First of all, international oil prices kept increasing and exceeded $100 a barrel in 2007 from just $25 a barrel in 2003. "The considerable amount of oil imports helped push the domestic oil and other prices up," said Xie.

Xie said another factor was the rise of international edible oil price, which nearly doubled in 2007, while the growth of edible oil price in the domestic market was slower than that in the international market.

"The rising oil and edible oil prices are two major structural causes pushing consumer prices higher," said Xie.

1   2   Next  



 
Top Story
-Protecting Ocean Rights
-Partners in Defense
-Fighting HIV+'s Stigma
-HIV: Privacy VS. Protection
-Setting the Tone
Related Stories
-January CPI Expected to Rise 6.5%
-'Mr Yen' Believes Yuan will Soar
 
Most Popular
 
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved