Despite heavy snow in most parts of southern China, the
country's consumer prices index may grow 6.5 percent year on year
in January, roughly the same as the December, Chen Xiwen, head of
the Office of the Central Leading Group on Rural Work, said on
Thursday at a State Council press conference.
"The storms have had a severe impact on agricultural production,
mostly in the south. The impact on fresh vegetables was
catastrophic in certain areas," he told reporters.
"But considering most of the winter grain crops are grown in the
north, the supply of grain, pork and edible oil nationwide largely
remains intact," said Chen, who added oil crops in the middle and
lower reaches of the Yangtze River were "seriously" affected.
By Tuesday, a total of 105 million mu (7 million hectares) of
farmland, mainly located in the mid and downstream of the Yangtze
River, was hit by the snow, in which 11.3 million mu lost all their
output, according to statistics released by the Ministry of
Agriculture on Thursday. Particularly, cole, vegetables, oranges
and wheat crops suffered severely from the snow.
The already tightened supply was further stretched by disrupted
transportation, which was also caused by continuous snow and sleet
over much of China. Premier Wen Jiabao had vowed to ensure the
transportation of daily necessities.
The public has started to feel the pressure as vegetable prices
escalated across the country. In Changsha, Wuhan and other hard-hit
cities in the southern, central and eastern regions, vegetable
prices have more than doubled. Even in areas not affected by snow,
such as Beijing and the southern Guangdong province, prices have
also risen sharply.
"Cucumbers were five yuan (69 U.S. cents) per kilo 10 days ago,
now you have to pay 8.2 yuan. Broccoli almost tripled from 2.8 yuan
to 8.2 yuan per kilo." said Huang Tianlu, a 45-year-old wholesaler
at Xinfadi market, the largest produce market in Beijing.
"As for the impact on the whole year's grain production, we
still have to wait and see. We are not sure how long the storms
would last or whether it would move to the north," Chen said.
"If the storms get worse or expand, China's agricultural
production will be affected seriously."
China's consumer price index (CPI) rose 4.8 percent in 2007,
with food prices, especially pork, as the major cause of the
increase. CPI figures are routinely released by the National Bureau
of Statistics.
"Compared with the grain price in the global market, that in the
Chinese market rose within a reasonable range in 2007," said
Chen.
Experts predicted the CPI could rise about seven percent
year-on-year in January.
Zhuang Jian, senior economist with the Asian Development Bank
mission in China, said the storms had a short-term impact on
transportation and farm production, which might push up CPI in the
first quarter in 2008 to 6.5 percent.
"In the long run, however, the impact on inflation is quite
trivial," he added.
Deutsche Bank chief economist in China, Ma Jun, said the recent
soaring price of farm produce would send inflation up to seven
percent or so in January, posing the biggest domestic macroeconomic
risk in the short term.
Other risks China faces, according to Ma, include the impact of
the U.S. economic slide on China's employment in export industries
and possible too big correction in the A-share stock market after
the Olympics.
Ma forecast the gross domestic product this year would rise 10.4
percent, slightly lower than the 2007 figure of 11.5 percent.
"The shopping spree in the coming Spring Festival, rising
transportation costs due to the storm and a relatively low CPI
figure in January last year is likely to nudge inflation this month
up to around seven percent," said macroeconomic analyst Lin Songli
of the Guangzhou-based Guosen Securities.
Local governments have taken a series of interim steps to help
cut the prices of daily necessities. Wuhan in the central Hubei
province has ordered all highway and expressway administrators to
exempt trucks carrying vegetables to the city from toll. It has
also decided to give a one-off subsidy of 120 yuan to 102,000
low-income families in the city by Wednesday.
In neighboring Hunan Province, the government provided instant
noodles, water, bread and biscuits to stranded passengers.
Changsha, the capital of Hunan, restricted the prices of some goods
in affected areas. About 300 teams have been sent to hard-hit areas
to monitor prices.
(Xinhua News Agency February 1, 2008)
