Special Report: NPC, CPPCC Annual Sessions 2008　

Chinese Premier Wen Jiabao on Wednesday urged governments at all levels to provide a steady and adequate food supply to the country's 1.3 billion population, in an effort to control inflation, especially the growing food prices, and maintain social stability.

"We will continue to implement the system of provincial governors assuming responsibility for the "rice bag" (grain supply) program and city mayors for the "vegetable basket" (nonstaple food supply) program," Wen told the National People's Congress (NPC), China's top legislature, in a report on government work.

In fact, this responsibility policy first appeared in a Chinese premier's government work report in 1995 and disappeared after 1998.

The policy was proved to be an effective measure to curb surging inflation, which stood at 20 percent in 1994, said Chen Xiwen, member of the National Committee of the Chinese People's Political Consultative Conference and an agricultural expert.

Mentioning the word "price" more than 40 times in his more-than-2-hour speech, Wen stated the current price hikes and increasing inflationary pressures "are the biggest concern of the people."

Governments at all levels are required to expand production, especially the production of the basic necessities of life such as grain, vegetable oil and meat as well as other commodities in short supply.

China's grain output grew four consecutive years to top 500 billion kilograms in 2007. But last year's consumer price index (CPI) rose by 4.8 percent year-on-year, mainly due to big increases in the cost of food and housing.

Wen said that "though the domestic prices of farm products have remained low for many years and some of the recent price increases were therefore overdue and somewhat reasonable, price increases nevertheless have a great impact on people's lives, especially on the lives of the low-income sector of the population."

The premier said the government will work to hold the CPI rise at around 4 percent this year, because "factors driving prices up are still at work, upward pressure on prices will remain great this year."

"In addition, prices of the means of production have continued to rise and real estate prices have risen steeply, making the task of holding down inflation difficult," the premier told nearly 3,000 NPC deputies at the legislature's annual full session, which opened Wednesday morning.

Local governments were not left alone to deal with this thorny issue. Wen also promised more subsidies to grain producers, to farmers for purchase of farm machines, and a raise of grain purchase prices.

The country will also "strictly control industrial use of grain and grain exports" and stop the "reckless expansion of the capacity for intensive corn processing," Wen said.

China now has an adequate stock of grain, and the supply of major manufactured consumer goods exceeds demand, said the premier.

"We can ensure adequate supply in the market and basic price stability as long as governments at all levels work to improve their leadership, diligently implement all policies and measures, and mount a concerted effort from the highest to the lowest level," the premier said.

TIMELY ALERT

The policy that governors and mayors are held responsible for "rice bags" and "vegetable baskets" was implemented in China in the mid-1990s to curb inflation when price rose at a rate as high as 20 percent. It played "a positive role" in maintaining stable supply of food and nonstaple food.

The soaring inflation in the 1990s seemed to be caused by food price increases, but "it was actually a result of the blind pursuit of GDP growth as local officials paid more attention to industrial expansion and neglected rural development, especially farm production," said Chen Xiwen, also director of the Office of the Central Leading Group on Rural Work.

"Now we can trace something similar as far as the current price hikes are concerned," he said.

"Some local governments are still too eager to lure investments and accelerate urban development at the cost of occupying more farm land around cities, which led to a short supply of vegetable and other farm products," he said.

The supply of farm products has a bearing on people's lives, and it is not a matter merely up to the market forces to decide. It is also wrong for local governments to leave farm produce supply to imports from other localities, said Chen, a deputy to the NPC.

"The responsibility system that Premier Wen asked governors and mayors to assume again today is a timely alert for us local leaders," said Zhang Bingsheng, mayor of Taiyuan City, Shanxi Province.

"I believe once major case relating to short supply of food products occurs as a result of local officials' dereliction of duty, someone responsible will be punished," said Chen during an interview with Xinhua.

Wen's price-curbing policy is welcomed by Hao Muzhi, a retired woman technician living at Nanxiange Street of Beijing's Xuanwu District.

"I pay 100 yuan more for food a month than in July," she said. "The government needs to do something to hold the price down and make food affordable to us all."

Handling well the issue of "rice bags" and "vegetable baskets" alone does not necessarily mean that inflation in China could be brought under control once and for all, said Chen Xiwen.

"But if not, it is very likely that the current 'structural price increases' would develop into 'significant inflation,'" he said.