China will 'strictly control' grain exports, boost imports

Straits Times 10 Dec 07;
Measures meant to rein in rising food prices, says economic planner

BEIJING - CHINA'S top economic planner has pledged to curb exports and industrial use of grain while boosting imports as part of efforts to rein in inflation.

Rising grain consumption as China becomes wealthier and a limited ability to increase the harvest may soon force the world's most populous nation to relax its policy of grain self-sufficiency.

China will 'strictly control industrial use and exports of grain while expanding imports to prevent a shift from structural price rises to evident inflation', the official Xinhua news agency quoted Mr Ma Kai, minister of the National Development and Reform Commission, as saying.

Despite a few years of bumper harvests, tightening grain supply has driven inflation. Price increases matched an 11-year high in October at 6.5 per cent.

'We will boost production of necessities, including grain, edible oil, meat and other major agricultural products to ensure market supply,' Mr Ma told a national development and reform meeting last Friday.

The government would clamp down on price rigging and offer 'allowances' to low-income residents to help offset price rises, he said.

Mr Ma also said the central government would increase its overall investment budget and continue to adjust investment structure. He did not disclose specific figures for next year.

Fiscal expenditure would be used mainly to improve the people's livelihood and boost economic and social development in backward areas, he added.

Chinese Vice-Premier Zeng Peiyan told the meeting that the local authorities should unveil more measures to conserve energy, protect the environment and improve the people's livelihood, according to Xinhua.

He also called for an improvement in the fiscal and tax system and macro-control efforts for a coordinated and sound economic growth. The growth mode of the economy should be transformed by relying more on domestic demand, he added.

Xinhua gave no further details.

The government said last Wednesday that its two main economic policy goals for next year were to prevent the economy from overheating and to keep food price inflation from spreading to other sectors.

High inflation touches a raw nerve in China. The protests that culminated in the bloody Tiananmen Square crackdown in 1989 were sparked in part by anger at inflation, which had rocketed to 25 per cent at the time.

REUTERS