Experts Warn of Inflation for Agricultural Products

China is facing a round of price hikes for various kinds of agricultural products.

Attributing this to both domestic and international elements, experts say the government should take timely measures to stabilize prices, while improving agricultural productivity in the long run.

Chen Xi has more.

Statistics from the Ministry of Commerce show domestic cotton prices has risen by over 65 percent in the past two months.

Li Guoxiang, a researcher from China's Academy of Social Sciences, attributes the major cause to floating international prices.

"China relies on the import of cotton, soy bean and sugar a lot. Recently, the international prices of these products are soaring, leading to price hikes in the domestic market."

Li Guoxiang says that China's import volume of cotton can reach to as much as half its total domestic production volume, due to large amounts of textile exports, while the number of soy beans can be two times greater than domestic production.

He Jun, a senior analyst with Beijing-based Anbound Consulting Firm, points out that the market is over-heating with too much so-called 'hot money' from both home and abroad.

"There is more than enough money flowing into the market, as the central bank has kept a low interest rate and given out another 9 trillion yuan of loans last year. Meanwhile, international 'hot money' is flowing into China with the anticipation of Chinese yuan's appreciation."

Besides strong monetary fluidity, He Jun says the rising price of electricity and water also increases agricultural production costs.

Li Guoxiang from China's Academy of Social Sciences adds that the rising production costs can also be attributed to shrinking farmlands.

"China is an agricultural production power, but the per capita area of cultivated farmland is less than half of the world average. It's not enough to meet both domestic and export demand. Besides, the process of industrialization and urbanization takes up much farmland."

Experts call on the Chinese government to take measures to prevent possible all-around inflation if the price hikes continue.

He Jun from Anbound Consulting Firm gives his suggestion.

"I think the government should take tight monetary policy, for example raise the interest rate, to control the monetary liquidity. And we should expand domestic supply and further open import channels, which are mainly controlled by state-owned enterprises. Lastly, the government should properly release agricultural storage from speculators."

Apart from these measures, researcher Li Guoxiang advises that China develop its agricultural production in foreign farmlands through international cooperation, as well as strive for dominance in international trade to create a favorable import environment.

For CRI, this is Chen Xi.