Grain price rise prompts warning
By CHRIS YEUNG
HEFTY rises in grain prices in Chinese cities in the past weeks have begun to drop as officials warn that an unchecked surge will trigger a spate of social problems, a leading state-run newspaper reported yesterday.
Giving an account on the price surge of grain prices since October, the People's Daily carried a Xinhua (New China News Agency) report saying grain prices had shown signs of stabilising in regions where the Government had sold state reserve grain throughstate-owned shops.
Grain prices in Guangdong, which had shot up by 30 to 50 per cent, had remarkably dropped, it said.
Quoting agronomists, the report said grain prices could be lower than the government level of new grain prices next year with the introduction of ''economic regulatory measures''.
''With the past 15 years of reform and development, we are fully capable of regulating the market and stabilising grain prices,'' the Daily asserted.
Official reports that Beijing and other provinces, including Hubei and Anhui, ordered new controls on commodity prices had cast a shadow over the bold plan of the Government to proceed with price reform next year.
But quoting sources, the Hong Kong China News Agency indicated yesterday that the plan to remove all price controls on coal remained as scheduled because ''conditions are ripe''.
Coal, which accounts for 76 per cent of China's energy consumption, is one of the last major commodities still subject to strict government price controls.
Xinhua explained that grain prices had first soared in southern provinces since October, followed by similar surges in the central provinces of Hubei, Hunan, Anhui and Jiangxi.
It spread to the northern provinces after southern authorities went to the northern regions for additional supply.
Although consumers had reacted calmly to the rises, Xinhua said more wanted the prices be kept within a level they could afford.
''Excessive levels of increase would again trigger a series of social problems,'' Xinhua said, without specifying.
The official news agency insisted that there was nothing wrong with the supply of grain and other commodities this year, laying the blame largely on the lack of a market regulatory system and maladministration by some local cadres.
For instance, the lack of market information flow between the grain producers and retailers had given rise to ''erroneous expectation'' over prices.
This had prompted some peasants hoard their stock for better prices rather than sell them in the market when there was a demand, Xinhua said.
The agency also accused some local cadres of diverting funds earmarked for subsidies to grain prices for other uses.
This had undermined the function of state-owned grain shops to regulate prices through the sale of subsidised grain in the market, Xinhua said.
The agency said the latest fluctuation had exposed the urgency to establish a unified national grain market and an effective market regulatory mechanism so that the level of grain prices would be high enough to encourage production and low enough for consumers.
The explosion in grain prices in some regions had shown the intrinsic weakness of the existing grain management system and the relevant departments, Xinhua said.
The pace of reform over the grain management system should be accelerated, the agency said.
It quoted a Vice-Minister of Internal Trade, Bai Meiqing, as saying: ''Developed countries have imposed macro-control and regulation on grain markets. They control more and are more strict than us.
''After the grain market is open, we must immediately seize the opportunity to establish a strong, authoritative and reasonable macro-control and regulatory mechanism.''