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Last Updated: Thursday, 10 January 2008, 12:02 GMT
China steps in to curb inflation
China meat market
Rising pork prices are making many Chinese do without
China's cabinet says it will temporarily intervene in the market to curb rampant food and fuel price rises.

Retailers and producers will face heavy fines if they increase the price of basic necessities, the government says.

Food prices climbed more than 18% in November, while the price of pork jumped by more than 50%.

Inflation has traditionally been associated with civil unrest in China, and correspondents say the intervention shows the government is very concerned.

During the past 20 years, the Chinese administration has largely abandoned price controls, as the free market took hold across the country.

The price of basic essentials has increased hugely during this time, and families on low incomes - numbered in their hundreds of millions in China - currently spend between 30% and 50% of their income on food for the table.

According to the BBC correspondent in Shanghai, Quentin Sommerville, rising prices were the main concern among Chinese households last year, outranking worries over corruption and the growing wealth gap.

But economists are sceptical that the new rules will work, as price controls often lead to empty shelves.

And the UN's food aid agency is warning that another measure taken by China - restricting the exports of rice and other staples - could have serious effects in the region.

The World Food Programme says China's move, which followed similar restrictions imposed by India and Vietnam, could help to cause acute food shortages.

The WFP says North Korea, East Timor, Afghanistan, Bangladesh and Cambodia are particularly at risk.

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