Premier Li Keqiang inspected Zhejiang Province last week.
During the inspection tour, Premier Li visited many enterprises in the province including Beilun, part of the Ningbo Zhoushan Port, which has topped the global cargo throughput for 12 consecutive years and is also the country's largest transfer station for iron ore and crude oil. Li vowed to take stronger measures to ensure the supply of commodities and to rein in their prices, saying that the government will provide utmost support to businesses struggling to cope with rising costs and prevent further surges in consumer prices.
This is a strong signal that stabilizing commodity prices, especially the prices of bulk commodities, is now on the priority list of top Chinese leaders. Since the beginning of this year, due in great part to global price hikes, rampant speculation and strong stimulus and unlimited quantitative monetary easing policies announced by most governments in the world to bail out their lousy economies from the COVID-19 pandemic, many commodities in China have witnessed unreasonable price hikes, some even hitting record highs. Actually, such rising prices in the market do not originate from robust demands, but are caused by speculation in staple commodities and raw materials and manipulation of their prices.
Skyrocketing prices have not only led to mounting pressure on large enterprises, but also severely impacted the operation of the country’s 44 million micro and small enterprises, more than 95 million self-employed individuals and ordinary people’s daily lives. Moreover, such price hikes will easily incur market monopolies, market speculation and hoarding activities, and prompt the producers downstream to reject orders to avoid further losses.
Governments at various levels should take concrete measures to deal with the price hikes. Energy is regarded as the blood of modern industry. Energy is needed in manufacturing as well as for people's daily use. Besides coal, the capacity of wind, solar, hydro, nuclear and other new forms of power should also be increased to ensure a sufficient energy supply for enterprises and civilian use especially during the summer peak time.
In order to curb unreasonable price swings for key commodities, Chinese regulators should improve the monitoring, forecasting and early warning systems for important commodities such as grain, corn, wheat, soybean, oil, iron ore, steel, copper and other nonferrous metals, thus enhancing the country's capability to respond to periodic fluctuations in global economy.
Efforts will also be made to maintain the stability of monetary policies and keep the RMB exchange rate basically stable so as to rationally guide market expectations. An inclusive financial package including relending, rediscounting and loan renewals without principal repayment must be underpinned. Commercial banks will be encouraged to offer more credit-based loans to small and micro businesses.
It is necessary to employ tax cuts, fee reductions and other preferential policies to help enterprises tide over difficulties. Meanwhile, to step up market regulation, any monopoly, hoarding and other market profiteering activities must be cracked down upon within the framework of law.
Even in market economies, government policies are indispensable to regulate illegal market behaviors, strengthen fair competition and maintain economic stability and sustainability at crucial moments. Nevertheless, enterprises should also take pains to actively explore their own potential to reduce costs and improve competitiveness in the market.
(The author is the editor-in-chief of Shenzhen Daily with a Ph.D. from the Journalism and Communication School of Wuhan University.)