The Chinese government today announced that it will take strong measures to limit the types of food and cotton prices, and has implemented a price increase of fuel supply management.

China's consumer prices rose mainly limited to food and energy, government policy-makers hope it will not be expanded in scope. Food and energy prices is a global problem. However, the impact of low-income countries it is particularly serious - necessities spending accounted for most of the family income. According to China's consumer price index, food accounts for one third of household expenditure.

A statement on the government website said the State Council decided today, especially to stabilize the grain, cooking oil, sugar and cotton prices. The State Department said the government will also increase the supply of diesel gas stations, and to ensure adequate supply of coal power stations. According to official news agency, the State Council ordered local governments and other levels of government agencies to provide temporary subsidies to help those who deal with problems in life the problem of rising prices, and increase the difficulties of students and student canteen subsidies.

It is noteworthy that the Government has not announced any change in monetary policy. Western economists suggested that China should prevent the economy from overheating by raising interest rates, and should allow the yuan to appreciate against the dollar, thereby reducing the import of food, fuel and other commodity prices.

China is ready to implement price controls on basic necessities, which is the socialist central planning system restore a measure of Chinese leaders to further show the situation on inflation alert, after they have been raising interest rates by more conventional means such as strive for economic growth to cool.

However, control measures have increased the anxiety of investors, who worry that Chin
a will introduce more stringent anti-inflation measures, the sudden slowdown in China's economic growth.

Caring for people attach importance to price increases

And the people closely related to the recent rapid rise in food prices, affecting people's livelihood. Caused by China's official attention. In people worry about high prices in response to labor time, the recent intensive high-level central position, develop measures to curb excessive price rises.

Stands to reason that food, vegetable prices are seasonal characteristics, China's grain harvest, food abundant, there is no basis for soaring prices. Urgent need to curb inflation expectations well, especially to prevent hot money speculation in grain and other food products. Government departments should implement more effective mechanisms to protect the supply and the market adjustment mechanism, eliminating panic people's lives, buying it will significantly reduce the phenomenon.

To "limit order" to suppress the price increase is a temporary solution for the problem. China's inflation can be divided into two parts, internal and external, must deal with the problem of inflation is not easy. Internally, the mainland within two years of new loans reached 1.7 trillion yuan of money chasing hot money flooded with various types of assets that resulted in speculation everywhere; to make the prices come down, people need to significantly tighten credit lines, but because of the interest rate will lead to more hot money flows to China, and the market expectation of RMB appreciation, the enemy line appeared to tighten policy at every step; other hoarding is also a serious cause of rising prices.

Externally, the United States of quantitative easing flooding the global money, hot money flows to countries with better economies led to soaring prices in the countries concerned.

Although China may limit hot money inflows, but entry of hot money through underground channels, it is difficult to intercept; the face of the current situation, inflation in China to win this war is not easy.