Tackling Inflation Is China's Top Priority

There is growing concern about inflation in China. Last month, overall inflation was up 5.3 percent compared to the year before. Food prices were up 11.5 percent. Chinese consumers are angry, and the government fears that could lead to social instability.

Copyright © 2011 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

STEVE INSKEEP, host:

Now as you just heard, rising costs in China can hurt the American economy. In a moment, we'll talk to David Wessel about this. But first, we go to China, where for the fifth time this year, the government has ordered banks to keep more money in reserve, hoping that will keep prices down.

As NPR's Louisa Lim tells us, inflation is well above the government's target of four percent.

(Soundbite of crowd chatter)

LOUISA LIM: Here in Beijing, shoppers are really feeling the pinch. I'm in a wholesale market, surrounded by stalls piled high with fruit and veg. Last month, inflation was up by 5.3 percent, compared to a year before. But a large component of that was rising food prices, with food prices up by 11.5 percent from a year before, and shoppers aren't happy.

Mr. LU: (Foreign language spoken)

LIM: Everybody's complaining that food's too expensive, says a stall owner who gives his name as Mr. Lu. He sells pork, but says business is slow.

(Soundbite of scooping nuts)

LIM: Across the way, Wang Limei is buying nuts for snacks for customers at his bar.

Mr. WANG LIMEI (Bar Owner): (Foreign language spoken)

LIM: Inflation has a huge influence on me personally, he says. We can hardly afford to eat anymore. We don't want to have kids because we're scared they'll starve to death. We'll all be bachelors forever.

Actually, so far, nobody is starving, but given the implications for social stability, tackling inflation is China's top priority.

Here's Vice Premier Wang Qishan, speaking last week on "The Charlie Rose Show."

Vice Premier WANG QISHAN (China): (Foreign language spoken)

LIM: The most pressing problem we are faced right now is the problem of inflation. We have to use monetary to a policy, fiscal policy, and at the same time economic restructuring.

Unidentified Man: (Foreign language spoken)

LIM: A newspaper hawker shouts out his wares. Beijing's four interest rate increases since October have made headlines. But it's a measure of China's nervousness about inflation that the company Unilever was fined $300,000 for just talking about possible price hikes.

Louisa Lim, NPR News, Beijing.

Copyright © 2011 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.