China vows to contain soaring prices as public fears mount

China said yesterday it was prepared to intervene to curb spiralling prices as it unveiled a range of steps aimed at easing growing public fears about inflation.

The government promised it would “improve” subsidies for poor families and ordered officials to ensure adequate supplies of key products such as vegetables, grain and coal and other energy supplies.

The government “will take temporary intervention measures when necessary” on key products, said a statement issued after a meeting of the State Council chaired by Premier Wen Jiabao. The statement cited growing inflation that has “raised the cost of living for urban and rural residents, especially low-income groups.”

It was the latest expression of growing official alarm over an inflation rate that hit a two-year high in October amid a surge in food prices.

In comments posted on the government’s website, Wen warned that “great attention should be paid to market supply and demand and prices because they are related to the public’s basic interests.”

Data last week showed the nation’s consumer price index rose 4.4 per cent year-on-year in October, well above the government’s full-year target of three percent. It was the fastest since September 2008.

A range of recent consumer surveys have shown that respondents are increasingly worried about rising food prices and plan to rein in spending on clothes and entertainment.

Inflation fears are always a concern to Chinese officials due to the potential for price rises to spark unrest. Such fears have been further fuelled by the US Federal Reserve’s decision to pump money into the American economy.

Chinese stock markets have slumped since the data raised expectations of government moves to damp down the economy. The benchmark Shanghai Composite Index has lost more than nine per cent since Thursday.

The current round of inflation has mainly been driven by soaring food prices as well as rising rents.

In the first 10 days of this month, the average wholesale price of popular vegetables in 36 Chinese cities was 62.4 per cent higher than a year earlier, official data showed.

Yesterday’s government statement offered few specifics and did not say that price caps would be imposed on any products.

Rather, it focused on ordering authorities across the nation to ensure market supplies of key goods while tackling hoarding and speculation.

Chinese officials have warned that extra US stimulus measures worth some $600 billion could cause damaging fund flows into emerging economies such as China and trigger inflation.

The government on Monday tightened rules on property purchases by foreigners to curb speculative inflows, following a series of steps this year aimed at dampening real estate speculation.