July 14, 2011

China on Wednesday (Jul 13) announced a series of measures aimed at boosting the country's supply of hogs in an effort to bring down the price of pork, which is contributing to soaring inflation.

In a meeting presided by Premier Wen Jiabao, the State Council - China's cabinet - said it would invest RMB2.5 billion (US$384 million) in large hog farms this year, according to a statement.

Farmers will also receive a subsidy of RMB100 (US$15) for every sow they raise, and they will also be eligible for RMB800 (US$123) in compensation for every hog they raise that dies from disease or other external factors.

The measures aim to encourage farmers to raise hogs. They come as the price of pork soars in China - where the meat is extremely popular among all levels of society - adding to fears about the politically sensitive inflation rate.

Recent steep increases in pork prices have had an impact on consumers and prompted price hikes in other areas, the statement said.

Economists have warned that the rise in pork prices could contribute to delaying a peak in food price inflation, and keep it elevated for longer.

China has been struggling to tame its inflation despite restricting the amount of money banks can lend on numerous occasions and hiking interest rates five times since October.

In June, the country's consumer price index rose 6.4% - the highest level in three years - further fuelling concern among policymakers anxious about inflation's potential to trigger social unrest.