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Economy

Economist suggests setting up consumer goods reserve

(Xinhua)
Updated: 2011-03-03 14:54
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BEIJING - Influential Chinese economist Li Yining has said the government must control inflation while maintaining economic growth in its new five-year plan.

He said China could adopt a mandatory "commercial reserve" system to prevent hoarding of common consumer items in times of shortage or rising prices.

The 12th Five-Year Plan for 2011-2015 period, which will be submitted to the annual session of the National People's Congress (NPC), China's legislature, this month, gave him confidence, Li said.

The current inflation had various causes, such as raw materials shortages and agricultural produce price rises, but speculation and rising labor costs were new factors, he said.

"Salary growth and commodity price rises keep reinforcing each other, like a leapfrog game in which two kids jump over each other in turn," said Li days before China's top political events, the annual sessions of the NPC and the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

Li serves as deputy director of the Economic Commission of the 11th National Committee of the CPPCC, the country's top advisory body.

"To cope with the rising agricultural produce prices, we can adopt a commercial reserve system, in which business, such as big supermarkets, will have mandatory reserves," he said.

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"In this way, people will not panic and end up hoarding goods. It can also make up for the shortcomings of the national reserve, which has limited stocks, both in amount and variety," said Li.

Vocational education should also be promoted so that farmers could learn new skills necessary to earn a decent living, he said.

For the next five years, new industries, such as new energy, new materials, bio-technology and low carbon industries, should be strengthened to make China more competitive on the global stage, said Li.

Commenting on China's overtaking Japan as the second largest economy, Li said: "It's good news. But what matters more is the GDP structure rather than the GDP amount alone."

China's consumer price index (CPI), the main gauge of inflation, rose 4.6 percent in December last year from a year earlier, and 3.3 percent for the entire year, exceeding the government's annual target of 3 percent.

The annual session of the CPPCC National Committee will convene on March 3 and that of the NPC will start on March 5. The two-week overlapping sessions mark the apex of China's annual political calendar.

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