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China eyes price controls to fight inflation
All they really need are a U.S.-style Consumer Price Index and Bureau of Labor Statistics.
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By Geoff Dyer
Financial Times, London
Tuesday, November 16, 2010
http://www.ft.com/cms/s/0/a49d39f4-f17b-11df-8609-00144feab49a.html#axzz...
China is considering a package of price controls and other measures to contain inflation which rose sharply last month and has become the principal risk to the economy.
The National Development and Reform Commission, China's main economic planning body, is putting together a "one-two punch" of policies to limit food inflation, state media reported on Tuesday, in a sign that debate is breaking out over how to tackle rising prices.
Several major cities in China have announced plans to try to cap food prices, while two officials in Beijing also confirmed this week that the government was looking again at price controls.
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Prophecy Receives Permit To Mine at Ulaan Ovoo in Mongolia
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that on November 9, 2010, it received the final permit to commence mining operations at its Ulaan Ovoo coal project in Mongolia. Prophecy is one of few international mining companies to achieve such a milestone. The mine is production-ready, with a mine opening ceremony scheduled for November 20.
Prophecy CEO John Lee said: "I thank the government of Mongolia for the expeditious way this permit was issued. The opening of Ulaan Ovoo is a testament to the industrious and skilled workforce in Mongolia. Prophecy directly and indirectly (through Leighton Asia) employs more than 65 competent Mongolian nationals and four expatriots. The company also reaffirms its commitment to deliver coal to the local Edernet and Darkhan power plants in Mongolia."
The Ulaan Ovoo open pit mine is 10 kilometers from the Russian border and within 120km of the Nauski TransSiberian railway station, enabling transportation of coal to Russia and its eastern seaports. Thermal coal prices are trading at two-year highs at Russian seaports due to strong demand from Asian economies.
For the complete press release, please visit:
http://prophecyresource.com/news_2010_nov11.php
Consumer price inflation rose to 4.4 per cent in October, well above the government’s 3 per cent target, after food prices increased at an annualised rate of 10.1 per cent over the month.
The surge in inflation has spooked domestic financial markets, with the Shanghai Composite index falling 5 per cent on Friday and a further 4 per cent on Tuesday on rumours about imminent interest rate rises and reports about price controls.
High inflation is potentially very damaging in China because as well as being a possible spark for political unrest, it could also encourage speculative investments by Chinese depositors who are currently receiving negative real returns on savings in the banking system.
In the face of mounting inflationary pressures, Beijing has already increased interest rates once and raised reserve requirements for banks on several occasions. Fuzhou city on the southeast coast announced price caps last week on four types of vegetables, while Kunming in the southwest has also announced price controls on vegetables.
The average price of 18 staple vegetables was 62.4 per cent higher in the first 10 days of November than over the same period the year before, according to a report by the Xinhua news agency on Monday.
The average price of the group of vegetables, which includes cabbage, cucumbers and potatoes, increased to Rmb3.9 ($0.59) per kilogramme. Garlic, which has been the subject of some speculative buying according to analysts, was up 95.8 per cent over the year before, while the price of ginger was 89.5 per cent higher, the report said, citing the Ministry of Commerce.
According to a report in the China Securities Journal, the measures being examined, in addition to price controls, include subsidies for consumers, a crackdown on hoarding food and other commodities and a policy of making city mayors responsible for the price of a set basket of goods, although it gave no details about how such a system would work.
Andy Rothman, an economist at CLSA in Shanghai, said that when the authorities announced a package of price controls in 2008 during a previous spike in inflation, they actually intervened very little in product markets. "It was a way of applying some psychological pressure on companies," he said. "The primary objective of the government's recent measures has been to make a political point that the Communist party is doing everything it can to avoid food prices going up too."
Yao Jian, a spokesman for the Chinese Commerce ministry, said the government was releasing stockpiled supplies of pork and sugar to ease price increases, while it would also take steps to increase vegetable production.
Chinese officials have warned that loose monetary policy in the US could cause inflation and bubbles in developing economies. However, many analysts in China argue that domestic monetary policy is at the root of current inflation.
UN officials, who this summer played down the risk of a repetition of the 2007-08 food crisis, are increasingly concerned that prices could rise sharply next year.
The UN's Food and Agriculture Organisation said this month that its food index rose in October to levels last seen during the peak of the food crisis in June 2008.
The 2007-08 crisis and the current price spike share worrying similarities, according to UN officials and agricultural economists. The major producing nations, such as Russia or Ukraine, imposed export restrictions on both occasions, while importers, such as China, responded with matching retail price controls.
China doubled the amount of new bank loans in 2009, while Ba Shusong, an economist at a think-tank connected to the State Council, said on Tuesday that new lending this year was likely to exceed the government’s Rmb7,500 billion target. Rising wages could also fuel inflation, economists said.
Fan Gang, a former adviser to the central bank, said China should allow its currency to appreciate more rapidly in order to contain rising prices of soyabean oil and animal feed. A stronger currency "may be used as a policy to deal with inflation and that would not only be good for the control of inflation but also would be beneficial for the overall balance of the domestic economy and external economy," he was quoted by Bloomberg as saying at a conference.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface. "The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
