Premier Wen Jiabao's vow to ensure the pork supply will help
allay public concern over soaring pork prices. It also indicates
that China's policymakers are paying more attention to the
country's inflationary pressure.
On Sunday, the premier took an inspection tour in northwest
China's Shaanxi Province to assess pork supply and demand.
According to the Ministry of Agriculture, in April live pigs
nationwide were priced 71.3 percent higher than a month earlier,
and pork, 29.3 percent higher.
In Beijing, pork prices rose more than 30 percent in recent
days. Wholesale prices in Shanghai hit 16 yuan (US$2.10) per
kilogram, a record high for a decade, up 20 percent from a month
earlier.
Ever since the consumer price index (CPI), a major inflation
gauge, rose 3.3 percent in March, the country began to brace itself
for mounting inflation.
Though the CPI dipped a bit in April to 3.0, double-digit
increases in pork prices clearly left policymakers with no choice
but to take efforts against possible upward spirals in consumer
prices.
The causes of the latest hike in pork prices appear obvious.
One factor was that low pork prices in the past few years
dampened farmers' interest in raising pigs. The dwindling supply
was exacerbated by this year's outbreak of blue ear disease,
leading to many pig deaths. An increase in the price of feed has
substantially increased the cost of raising pigs.
As consumers are now feeling the pinch, the government should
respond promptly to ensure that low-income families are properly
cushioned.
It is also important to allow market-driven prices to signal
changes in supply and demand so farmers can adjust production and
can profit accordingly.
That the price hike in pork will affect people's diets is a
sound reason for Premier Wen to step in.
However, for policymakers, the more pressing task is to prevent
spiraling prices from rippling through the economy.
As local governments are mobilized to support farmers in raising
more pigs, it is more than likely that the supply of pork will be
significantly increased in several months to meet the demand and
bring down the price.
But it is another thing to curb the gradual increase in overall
consumer prices, as indicated so far this year by the CPI.
(China Daily May 29, 2007)