Over-supply of money “Excess money accumulated in recent years has brought huge inflation risks to China’s economy. The economy is saddled with excess liquidity amounting to 43 trillion yuan, according to the People’s Bank of China. Last year, mainland banks extended 9.59 trillion yuan in new credit, a 95 percent increase over 2008. “Inflation affecting groceries including mung beans, ginger, garlic and chillis is the result of an oversupply of money.” — Economist Huang Xiping, the National Development Research Institute of Beijing University, on a CCTV program. Impact of overseas markets Price increases of agricultural produce and staple products overseas had greatly affected the domestic market. The frequent natural disasters this year which affected agricultural production was another reason. For example, Hainan, one of China’s major vegetable production base, was flooded in October. — Sheng Laiyun, spokesperson for the National Statistics Bureau. Speculation Speculation should be partly to blame for the price hikes. Crop reduction affected supply and speculation aggravated the situation with speculation in the price of garlic, mung beans and cotton. The CPI increase was mainly caused by rising food prices. — Tang Min, deputy secretary general of China Development Research Foundation (Han Ximin) |