Guangdong wants to control prices to battle rising inflation

PUBLISHED : Saturday, 19 May, 2007, 12:00am
UPDATED : Saturday, 19 May, 2007, 12:00am

Guangdong is seeking public support for its plea to the National Development and Reform Commission (NDRC) for more administrative power to control prices such as parking fees as part of the province's efforts to rein in inflation.

The move follows a Guangdong announcement in March that it would start to exert control over the price of 90 per cent of medicines on the market.

The province is also considering capping the cost of education and fertiliser in what appears to be a throwback to the days of the planned economy, albeit one welcomed by many economists.

Administration information officer Gao Yiqian said yesterday that it was still waiting for the commission's reply to the application.

'We have also posted the price control proposal [on the internet] for public feedback,' Mr Gao said.

Administration director Sun Qingqi was quoted by regional media as saying the provincial government did not have the authority to set ceilings for items such as parking fees and house prices.

But under pressure from a public worried about rising prices, local authorities in the province have started using what administrative clout they have to cap the cost of services and products.

Guangzhou authorities said this week that no approval would be given this year to change any charges such as estate management fees or educational expenses, which required city approval to alter.

Officials have also been monitoring property prices for almost a month to track down developers charging unreasonable prices.

But residents said some of the government's measures would be of little benefit.

'Why can't they lower the price of bus tickets?' 62-year-old retiree Chen Sihong asked, suggesting that caps on parking fees would only help the rich who could afford cars.

Cheng Jiansan , a macroeconomist with the Guangdong Academy of Social Sciences, said inflationary pressures meant the government had to consider controlling prices that related to people's lives.

He said the prices of medicine and food products such as pork and cooking oil had risen noticeably since late last year. And after nearly 30 years of market reform, price reform still lagged, with governments still using their administrative powers to intervene in pricing issues.

'The Hu Jintao and Wen Jiabao government is an administration which has paid much attention to people's lives and local authorities are just following their direction,' Mr Cheng added.

Ding Li , another academy macroeconomist, said governments such as China's, which claimed to represent all citizens' interests, had an infinite number of responsibilities.

Dr Ding said the government had to control the prices of some products that free-market theorists would want to leave unrestricted.

'But it's better to control the prices or [even some economic activities such as] the share market than to face demonstrations by people who have lost their money,' he said.