The Chinese government has signaled a new approach to fighting inflation increased rapidly: to provide direct pressure on big companies to resist price increases. Unilever, the giant Anglo-Dutch consumer goods group, has said it will postpone plans to raise prices of goods such as soap, shampoo and detergent after talks with the Chinese government. Last week, Chinese shoppers emptied supermarket shelves of goods such as shampoo, soap and even instant noodles, after state media reported that large companies – including Unilever and Procter Gamble – plans to raise prices by 5 and 15 percent from early April. Worried by the reaction, the National Development and Reform Commission – the country's economic planning agency – contact the company, urging them to reject price. Other Chinese companies including Liby, a leading manufacturer of detergents, and Tingyi, which produces half of China's instant noodles, also agreed to postpone planned prices rise.
The Chinese authorities clearly worried that rising prices – particularly for essential goods like food – can lead to increased social unrest and political. Food prices rose 11 percent in year to February, more than twice the 4. 9 percent in the overall consumer price index. Last November, the Chinese government responded to scare over rising oil prices by ordering the largest producers in countries not to raise cooking oil prices until March. But while the Chinese authorities routinely apply pressure on Chinese companies – especially state-owned enterprises – this is one of the first examples in which the foreign multinational companies have been asked to put off raising prices, and to absorb the rising cost of energy and other materials standard.
Recent developments of this happened because the Chinese government grapple with thorny issues. On the one hand, it is worried about rising inflation. However, at the same time, concernthat if the brakes too much, economic activity will decline, and unemployment will jump sharply. As a result, the Chinese government relies heavily on administrative measures to keep inflation under control. This country has increased the reserve requirement ratio – the money that banks must hold reserves with central banks – nine times since 2010, each time by 0.
5 percentage points. This limits how much banks have available to lend. At the same time, China's central bank and banking regulators is to establish an individual credit limit for the bank, and check near the banks in accordance with their direction. Conversely, interest rates have risen only three times, and the countries of the one-year yuan deposit rate at 3 percent, far below the inflation rate in the country is expected to rise above 5 percent in the coming months. In the latest newsletter, Michael Pettis, a professor at Peking University's Guanghua School of Management, Show that there is a subtle shift in the attitude of China's central bank, the People's Bank of China.
At their conference in the last quarter of 2010, the PBOC expected the global economy will continue to grow in 2011. He stated priority is to stabilize prices, and said it would bring credit growth to "normal" limits. But in 2011 their first quarter conference, China's central bank said the global recovery basis is not too dense. And although it is still believed to stabilize the price level is an important task, simply called "liquidity management". According to Pettis, to the pan.
"I suspect it means that policy makers become a little more concerned with slowing growth and a little less concerned about domestic overheating. " China's economic growth, he said, "may be slowing faster than Beijing would like, and combined with the external environment is very stable, I think they will ab-hearttightening too much anymore. We'll see how much higher interest rates and reserve requirements further enhance our chances of getting in the next quarter "This makes it more likely that we tend to see the Chinese government to rely on direct intervention -. Not in a strict monetary policy – to control rising prices. .
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