Grocery shopping has become a painful experience for Zhang Xueyi.
Meat prices have risen 50 percent in the past year, and eggs and other products are not far behind, forcing the 31-year-old railway technician's family to spend a third of its 3,000 yuan (US$400) monthly income on food.
"If prices go up more, we have to pay. We'll cut back somewhere else," said Zhang as he hefted bags of eggs, vegetables and rice from the market down a narrow Beijing lane.
PHOTO: AFP
After a run that has seen sizzling growth top 10 percent for four years, analysts say China's supercharged economy is facing strains that could break out into an upsurge of inflation.
So far the worst damage has been confined to food prices, which jumped 15.4 percent last month over the same month a year ago and drove overall inflation to a decade-high 5.6 percent. But wages are rising too, as are the costs of oil and electric power. Record-setting exports and a stock market boom are sending cash flooding through the economy, stoking demand for goods.
The Chinese economy "might have entered a region where we should be on guard," said a central bank official, Zhang Tao (張濤), quoted last week by the state newspaper China Securities Times.
If the trend goes unchecked, the impact could be felt abroad as consumers who depend on China as the world's low-cost factory have to pay more for appliances, shoes and other goods. Pinched Chinese consumers might spend less on foreign goods, widening a yawning trade surplus that has strained relations with Washington and other trading partners.
Economists say the latest price spike is due mostly to temporary shortages of pork, the staple meat whose price soared 86 percent last month from a year ago.
Pressure is growing in energy, where Beijing is holding down retail prices by blocking state-owned gasoline and power companies from passing on higher costs, said Nicholas Kwan, an analyst for investment bank CLSA in Hong Kong.
Chinese oil refiners are losing US$5 per barrel of oil that they process into gasoline or diesel, he said.
"I think it's just a matter of time until they have to bite the bullet and raise domestic prices," Kwan said. "Otherwise they risk an artificial shortage because oil companies will refuse to refine oil into gasoline if they are losing money."
Wages rose 21 percent in the first quarter of the year over the same period last year, according to the government, as companies competed for labor. Even that rise might not reflect the extent of pressure faced by employers, because those data cover only government companies, not the booming private sector.
"There's very little spare labor for manufacturing now, so we think we're seeing more wage pressure," said Stephen Green, senior economist at Standard Chartered Bank in Shanghai.
Add to rising costs the "wealth effect" produced by a stock market boom. The country's main stock index is up more than 70 percent this year, making speculators rich on paper and fueling spending.
Exporters already are struggling with the steady rise of China's currency, the yuan, which has pushed up the US dollar prices of their goods by almost 10 percent over the past two years.
The price surge has alarmed Chinese leaders, who remember that 1989's pro-democracy protests in Tiananmen Square were driven in part by anger at raging inflation that topped 18 percent a year.
Chinese Premier Wen Jiabao (
Beijing has raised interest rates three times this year to cool the boom and avert a rise in inflation. After seeing last month's price data, economists said they expect another rate hike shortly.
Until now, intense price competition in a Chinese market filled with low-cost goods has prevented makers of most goods from passing on rising costs to consumers. But economists say struggling companies might finally be forced to stand their ground and rise prices.
Last week, the government said an investigation into rising food costs found that makers of instant noodles illegally colluded to push up prices by up to 40 percent.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique