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Last Updated: Thursday, 6 December 2007, 00:13 GMT
Rising food prices upset China's shoppers
By Quentin Sommerville
BBC Beijing correspondent

China meat market
Rising pork prices are making many Chinese do without

It is lunchtime at one of Beijing's busy open-air markets. Most of the stalls are crowded, but the meat counters are quiet.

Pork prices have jumped by as much as 70% in the last year in some parts of the country.

In fact, the prices of everything in the market seem to be on the up.

In a country where people have grown used to having more money in their pockets, that has come as a shock.

"We earn 1-2,000 yuan a month," says one woman shopper. "Now everything - including noodles, vegetables and meat prices - is going up. They're too expensive, we can barely afford it."

Twenty years of a booming economy mean that an entire generation has grown up in prosperity.

But now, because of price rises, some are for the first time finding they can no longer put meat on their table.

"The speed of the price rise is much faster than our wage increase," another woman says.

"The cooking oil, for example. Previously it was 50-60 yuan a bottle, now it's gone up to 100. We can accept that our salary won't increase, but please don't let the food price go up."

On the other side of the counter a butcher is busy preparing a handsome leg of pork, but he wonders who will buy it.

"It's not good," he says. "My turnover is down by about a third, many old housewives are complaining, they're all going to the supermarket now, looking for promotions."

Demand from the wealthy

But why have prices have shot up so fast?

I hope that our salaries can keep on going up, and keep up with inflation
Estate agent Wang Na

"When people get richer, they like eating more meat," says Stephen Green, an economist with Standard Chartered in Shanghai.

"For the countryside, that creates a big demand issue, and in the Chinese countryside there is not a lot of good land.

"What you really need is strong productivity growth to keep up with the urban area's increasing wealth, but... there simply hasn't been that productivity improvement."

Urban incomes have been growing by between 10% and 15% per year. The countryside simply has not been able to keep pace with the town.

That is pushing up prices across the board.

Rising prices

Disease in the country's pig population has not helped.

The government, led by premier Wen Jiaobao, is encouraging farmers to breed more pigs.

China meat market
More meat must be produced to keep up with demand

People's sensitivity to prices was underscored recently when three people were killed in a stampede at a supermarket.

They were trampled to death as they tried to buy cooking oil that was discounted by a bit more than a dollar.

It is a crisis that may be far worse than the government is letting on, according to Dr He Fan of the Chinese Academy of Social Sciences

"In the eyes of ordinary people, the official inflation figure is far from the real picture," he says.

"Lots of other important things are being left out. There's been a rapid rise in the cost of housing too. People are worried."

Rural business

Someone who is not worried, is farmer Wang Chao.

The pigs in his surprisingly clean pigsty have never been more valuable. So much so that he dropped out of university to care for them.

"I felt I have learned all the things I need," he says.

"Last year, I found that the number of pigs dropped and forecast the pork price would rise rapidly. I didn't really care about the degree.

"With this good opportunity, I can put what I learnt into practice and start up my own business, so I just dropped out and went back home."

Political prosperity

Back in the city, Wang Na, is shopping at western style Beijing supermarket.

An estate agent, she is part of the growing middle class, but even she is having to cut back.

"I hope that our salaries can keep on going up, and keep up with inflation," she says.

"That way we'll be able to continue consuming, but if they stay the same, and prices keep rising, then we'll just have to starve - or just eat vegetables."

Few people are in danger of starving yet, and many expect prices will stabilise after the next harvest when, hopefully, farmers will catch up with the demands of their urban customers.

Official inflation rates hover around the 6% mark, well below the double-digit peaks of the 1980s, when price rises caused so much discontent that they contributed to the protests that lead to the Tiananmen uprising.

Beijing is keeping a close eye on the situation this time.

Much of the unelected communist party's legitimacy stems from its economic success.

If that prosperity is called into question then people may begin to start questioning their leadership.

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