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Monday, May 12, 2008
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China keeps prices stable

Rice being prepared at a food stall in Shanghai. — Photo: AFP

BEIJING: Amid a major wave of international grain price hikes, China has managed to maintain stable domestic prices.

Wheat prices on the Chicago Board of Trade surged more than 140 per cent in March, and rice prices went up over 80 per cent. The average grain retail prices in the Chinese market, by contrast, registered only a slight growth, from 4.14 yuan (about 59 cents) per kg from the beginning of January to 4.19 yuan by March end, according to statistics from the Ministry of Commerce.

The government’s efforts to ensure food supply, including restrictions on grain-consuming bio-ethanol projects, were behind the stable prices, said analysts.

The government decided in March to spend another 25.25 billion yuan in addition to this year’s rural budget, mainly to subsidise farmers’ purchase of seed, diesel, fertilizers and other production materials. China ranked second worldwide in energy output and consumption. Almost half of its crude oil demand depends on imports. But China attached greater priority to grain security while it actively developed alternative energies. The National Development and Reform Commission (NDRC) stopped approving bio-ethanol projects using corn and wheat last May and planned to adapt the existing four grain-consuming projects to use non-grain materials such as cassava and straw. China would rather use non-grain plants that grew in wild and salt land to produce bio-ethanol, so as not to take away farm land and reduce grain output, said the NDRC. — Xinhua

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