China's parliament warns of runaway inflation, calls for support for exports

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China earmarks 5.86 bln dlrs to help Guangzhou factories: report
China has earmarked 5.86 billion dollars to help struggling factories in the Pearl River Delta fight soaring production costs, a report said Wednesday. The money will be used to encourage small and medium-sized factories to move their operations to remote parts of Guangdong, the province's Communist Party Secretary Wang Yang reportedly said Tuesday. "We have been thinking of ways to minimize the burden on factories such as reducing government levies," Wang was quoted as saying in a report by Hong Kong's The Standard newspaper. "But we are also introducing measures to help factories move to eastern, western, northern and central parts of the province," he said. Other measures included concessions on electricity, water charges and government fees for factories relocating to the inland parts of the province, Wang said. The Party Secretary said about 35,000 factories had cancelled their registration in Guangdong between January and May this year, up 35.7 percent year-on-year, according to the report But he added that about 40,000 new enterprises had registered with the city over the same period. Rising production costs and the rise in China's currency have forced many labour-intensive operations in the Pearl River Delta -- the country's manufacturing hub - to shut down or move to inner provinces such as Henan and Sichuan in recent months.

by Staff Writers
Shanghai (AFP) July 23, 2008
China's parliament on Wednesday urged the government to do more to curb inflation, while also calling for more policy support for the export sector.

"We must closely watch price trends to avoid overly high inflation causing severe damage to the domestic economy," the financial committee of National People's Congress said in a statement on its website.

The committee warned China's economy may also be moving toward lower growth and said the government should make proper policy adjustments given uncertainties in the global economy and a drop in export growth.

China's economy grew 10.1 percent in the second quarter, down from 10.6 percent in the first quarter, according to figures released last week.

Consumer price inflation slowed to 7.1 percent in June from 7.7 percent in May. But producer prices -- which signal the direction in which prices are headed -- rose faster, increasing to 8.8 percent from 8.2 percent in May.

China must push ahead with reform of energy pricing to reduce inflationary risks, the committee said.

It argued that once energy prices rose, producers would make more of it, taming inflation in the long run.

It said China's policymakers should consider introducing favourable policies for the textile, clothing and toy sectors to cushion the impact that a slowing global economy has had on the exporters.

On the currency, the committee said China must perfect its exchange rate adjustments to curb increasing inflows of speculative capital, or hot money, and weaken appreciation expectations.

The National People's Congress is frequently described as a rubber-stamp parliament, and the government is under no obligation whatsoever to follow advice from the legislators.

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US calls on China to unlock WTO trade talks

Washington (AFP) July 17, 2008
The top US trade official said Thursday China is key to a breakthrough in World Trade Organization trade liberalization talks next week and has a "particular obligation" to make concessions.

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