Inflation tops list of public concerns in China

BEIJING—Rising prices of consumer goods have become the top concern of urban and rural residents, followed by “income gap” and “corruption,” according to a survey by the Chinese Academy of Social Sciences (CASS).
Results of the survey on urban and rural residents’ life satisfaction were published in CASS’s 2008 Blue Paper of Society on Friday. Director of the Institute of Sociology under CASS, Li Peilin, said that 30.5 percent of the people surveyed chose “rising prices of consumer goods” as the most serious social problem, followed by “income gap” and “corruption.”
Both urban and rural residents feel the pressure from rising prices of consumer goods in 2007, according to home visits conducted in October of 2007 in seven cities, seven small towns and their surrounding rural areas, and eight rural areas in Huangpo district of Wuhan City, capital of central Hubei Province. “Laid-off and re-employment” and “social security” used to be top concerns in the 1999-2005 period. But “Rising prices of consumer goods,” to which 66.5 percent of urban residents and 57.5 percent of rural residents surveyed expressed concern, jumped to the top of the list this time. “Housing reform” with 24.6 percent and “food and drug safety” with 26.6 percent ranked second on the lists of concerns of urban and rural residents, respectively.
The country’s accumulated Consumer Price Index (CPI) increased by 4.6 percent in the first 11 months of 2007, to which food price hike contributed more than 80 percent, reported China Finance Information on Friday. After world crude oil prices spiked above a record 100 U.S. dollars per barrel during the first trading day of 2008, analysts here said that China would see mounting inflation pressures but the impact would otherwise be limited. Zhou Dadi, an energy researcher with the National Development and Reform Commission (NDRC), said that the macroeconomic impact would be muted. Although China’s oil consumption has been increasing, the major users were in the transportation and petrochemical sectors, which were somewhat better able to bear the higher costs.
Light, sweet crude for February delivery rose 3.64 U.S. dollars to settle at 99.62 U.S. dollars per barrel on Wednesday, rising above its previous record close of 99.29 U.S. dollars set last November on the New York Mercantile Exchange (NYMEX). However, crude briefly broke through the triple-digit batter for the first time ever during the day, triggered by concerns over tight supply related to Nigerian unrest, anticipation of a continued fall in U.S. stockpiles and the weak U.S. dollar. As a major world oil importer “China is inevitably linked to fluctuations of international oil prices,” said Wang Jian, a macro-economic analyst with the NDRC.
“Spiking crude prices would build up the country’s inflation pressure, as a wide range of goods, including grain products, could see price hikes arising from higher oil prices,” said Li Guohong, a senior analyst with the research center of Galaxy Securities. The consumer price index (CPI), the major inflation indicator, hit an 11-year high of 6.9 percent in November, mainly on soaring food prices. Li, however said the government should not raise refined product prices any further, despite the impact on inflation. China has raised the prices of refined oil products four times within about a year. The most recent hikes, driven by an earlier surge in world crude prices, lifted the prices of gasoline, diesel and aviation fuel by 500 yuan per ton, a rise of almost 10 percent, starting on Nov. 1.
Analysts believed these increases had played a role in driving the November CPI up from the previous high of 6.5 percent in October. The NDRC said the increases would contribute 0.05 percentage points to the monthly CPI figure. Li said there would not be a similar mandatory increase ordered by the government this time around. The high inflation rate, well above the official target of 3 percent for 2007, has become a major concern of the government, which is concerned about its impact on the poor. Chinese consumers have already begun to feel the pinch of soaring international oil prices, even though domestic prices are not directly linked to international prices.—Xinhua