The government should upgrade measures to deal with issues caused by the rise in prices of goods, says an article in Market News. The following is an excerpt:
The macro-control measures taken by the government to check excessive price rises of goods was necessary to ease public anxiety. But more importantly, we should find out the real factors that led to the present price hikes, and find more effective ways of handling such problems.
In the past, China concentrated more on how to basically feed and clothe its people. So the quantity of agricultural products was the main concern. Agricultural development had long been held as an appendage to industrial development. This type of thinking was correct at the time. After many years of great efforts, China has mostly solved the poverty problem and the public now demands better food quality. This demand has pushed up prices for seeds and grains and hence, food prices.
The increase is in fact a normal response to market demand and better protects the interests of farmers.
The rise in food prices last year compelled farmers to produce more. It was good for farmers. But we should also see that middle and low-income families do not become the victims of price rises. Some urban residents reduced their consumption of meat products while other lowered their living standards.
The current price intervention measures by the government are necessary, but they are only temporary. The government should introduce long-term measures that reduce inflation caused by overall price rises.
Toward this end, two aspects need to be looked at. First, the government should increase the subsidies to low-income families to help them fend off price rises, especially for daily necessities.
Second, the government should improve the distribution system and raise the income of middle and low-income families. As long as we can deal with these issues, price rises can be tolerated.
(China Daily January 29, 2008)
