China vows to curb inflation risks by tackling ‘malicious speculation’ in commodity markets

The State Council has promised tougher oversight of commodity markets and more domestic supply to ease prices

China’s leaders are worried high commodity prices could be passed through to small businesses and eventually consumers

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The State Council has promised tougher oversight of commodity markets and more domestic supply to ease prices. Photo: AP

Published: 8:00pm, 20 May 2021Updated: 9:02pm, 20 May 2021

China says it will step up efforts to curb fast-rising commodity prices and prevent inflation, pledging more targeted measures to fight “abnormal trading” and “malicious speculation”.

At a meeting chaired by Premier Li Keqiang on Wednesday, the State Council said authorities will pay closer attention to the unfavourable impact of high prices and deploy a two-pronged approach to stabilise markets, increasing supply and enhancing supervision.

“We must take comprehensive measures to ensure supplies, curb the unreasonable price rises and try to prevent them from passing on to consumer prices,” the executive body said according to an online statement.

Raw material costs have been sent soaring by global monetary easing and high demand, as major economies, including China, recover from the coronavirus pandemic.

China’s Financial Stability and Development Commission, which is headed by Vice-Premier Liu He, President Xi Jinping’s top economic adviser, flagged concern about potential economic risks associated with high commodity prices and inflation early last month.

The country’s factory gate prices jumped 6.8 per cent year on year in April, with consumer prices growing 0.9 per cent from a year earlier. However, consumer inflation is still well below the full-year control target of 3 per cent.

The People’s Bank of China downplayed the risk of imported inflation in its monetary policy implementation report last week.