Concern over inflation

PUBLISHED : Thursday, 05 May, 1994, 12:00am
UPDATED : Thursday, 05 May, 1994, 12:00am

CHINA'S battle against inflation has entered a critical period as newly-released government statistics showed that food prices across the country have remained alarmingly high in the first quarter of this year.

Statistics quoted by the Hong Kong China News Agency yesterday showed that food prices in 35 major Chinese cities jumped 29 per cent in March, a little down from the 31.7 per cent in February.

And the agency claimed that since March, price increases - not just food items - have begun to ''stabilise'' and ''retreat'' although the situation remained serious.

For example, the consumption price index went down 0.5 per cent in March and the prices of means of production such as steel and coal also showed some improvement in the same period.

In a separate report by the agency, Xu Rongchang, a researcher of the Ministry of Internal Trade, was quoted as saying that inflation has already reached the ''maximum limit''.

Mr Xu pointed out that although the economy had achieved spectacular growth every year in the past six years, the rural economy only showed modest increase in that period and the income of farmers still lagged significantly behind those of urban residents.

Echoing Mr Xu's warning was well-known economist Fang Weizhong.

Speaking at an economic seminar in Beijing yesterday, Mr Fang said inflation had become a complicated issue in China as the country faced an insatiable demand for social consumption, rising unemployment and unequal development in different parts of the country.

Although Beijing had hoped that inflation would remain within 10 per cent this year, statistics showed that the social retail price index - China's key indicator of inflation - jumped 20.1 per cent in the first quarter of this year.