January 28, 2008

China to cool inflation by curbing industrial use of corn, raising farm subsidies

China on Friday disclosed new steps to tame inflation by increasing farm subsidies and lowering the industrial use of corn as inflation looms near decade-high levels.

Beijing gears to boost grain production by paying more for wheat and rice, the country's planning agency, the National Development and Reform Commission, said. The agency pledged to take steps to increase supplies of grain, meat and cooking oil.

Government officials also said that they will seriously control the development of industrial use of corn.

As of December 2007, inflation rate was 6.5 percent compared with the previous year, down only slightly from November's 6.9 percent, the highest rate in 11 years.

Food prices have been soaring at double-digit annual rates since mid-2007, due mostly to shortages of pork and grain.

In 2007, food prices rose by 12.3 percent for the full year, while the cost of pork, rose 48.3 percent, government data disclose.

China's inflation is expected to stay high through 2008, with analysts forecasting a full-year figure of up to 5 percent.