Cold weather in China fuels inflation?Society?News ...

Workers clear icy roads in Guilin, Guangxi. (File photo/CNS)

A strong cold front has pushed temperatures to their lowest in nearly three decades in most parts of China. The unusually cold winter may cause food and energy prices to rise, fueling concerns relating to inflation. The prices of China's imported crops have jumped threefold, triggering international concern over whether the country is hoarding grain and if inflation caused by the cold weather will spread across the world.

The worst snow storms in half a century took hold of China in January 2008, causing more than 10 cities and regions in the southern and northern parts of the country to be covered by snow and severely disrupting the supply of water, electricity and food to more than 100 million people. Few at that time thought the weather would result in soaring food and energy imports and a sharp rise in global commodity prices. Therefore, while the cold weather this year has not been as severe as in 2008, it is still sparking public concern.

Some regions in southern China are experiencing their lowest temperatures in nearly five decades, prompting local residents to demand supplies of heaters in accordance with the standards set for the northern part of the country. If their demands are met, this could result in tighter supplies of natural gas and an increase in imports. It may also lead to a sharp rise in the prices of global oil, gas, electricity, heaters and food.

The state news agency Xinhua noted that while regions in northern China were usually cold in the winter, harsh weather with temperatures below zero had now even spread to regions in the south. This has affected agricultural production in Guangxi and Guizhou.

The National Meteorological Center said southern China would continue to experience severe winter storms and freezing weather and local governments should adopt measures to curb the prices of agricultural produce and keep a check on rising energy demand. This will include reducing electricity and distribution costs of vegetable producers and asking enterprises to step up natural gas production and imports.

The country's food prices have risen sharply over the last two months. Statistics showed that food prices in major cities had risen for more than nine consecutive weeks since October, mainly due to soaring vegetable prices.

Economists have warned that surging food prices are pushing up inflation which could have an impact on the country's economic growth. The consumer price index in December was estimated to have risen 2.4% year on year.

To prevent rising inflation from hurting China's economic recovery, the government has been releasing its vegetable reserves while trying to reduce the transportation, storage and wholesale costs of produce, as well water and electricity usage expenditure.

Due to an increase in natural gas prices in November, China is expected to ramp up imports of gas during the first quarter of this year. However, as prices of international energy continue to rise, price hikes are expected to be shifted to the manufacturing and transport sectors.

Source: http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130112000080&cid=1103&MainCatID=11

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