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SCMP Reporter

SENIOR officials in Guangdong yesterday expressed concern that their battle against inflation might fail this year.

  Speaking at a special session with about 30 delegates to the Guangdong People's Political Consultative Conference at the state Zhudao Guesthouse yesterday, Executive Vice-Governor Lu Ruihua, admitted they faced a tough battle.

  Representatives attending the annual conference session, however, still pressed the senior leader to keep inflation down.

  In his Government Work Report tabled at the Guangdong People's Congress last week, Guangdong Governor Zhu Senlin said the Government hoped to keep inflation within 12 per cent this year. Last year's inflation rate stood at 18.6 per cent.

  Mr Zhu last year insisted that this year's target could be achieved if strenuous efforts were made.

   But the Governor's right-hand man, Mr Lu, said the Government was short-handed to keep prices down to that level.

  He told conference delegates the Government felt it was sandwiched between enterprises and consumers in its fight against inflation.

  The Vice-Governor said while some enterprises pressed the Government to take a hands-off approach, consumers wanted more aggressive measures.

  The Government faced an awkward situation because it was obliged to raise prices of farmers' harvests to protect their interests, but also had to keep prices of staple food at a reasonable level.

  In addition, the Vice-Governor admitted the value-added tax introduced by Beijing had led to price hoarding in some areas, further deepening the inflation crisis.

  But he reiterated the Government would take every possible means to ensure a stable market and keep prices of vegetables, grain and oil down.

  But Mr Lu's assurances apparently failed to satisfy some of the representatives, who kept urging the Government to strike a better deal with Beijing on fiscal arrangements.

  A Guangdong Industrial and Commercial Bank representative said Guangdong should forge one step ahead of other provinces in reforming the banking sector.

  He feared that Guangdong might lose its competitive edge because Beijing has indicated it will give priority to key infrastructure projects and large state-owned enterprises in 1994.

      The representative even suggested in order to safeguard Guangdong's interest, the province sometimes might have to learn how to ''bend'' the rules laid down by Beijing.



Fears rise over inflation battle