CHINA:Alarm bells are ringing in China after a freakish winter badly hit food prices.
USING A traditional Chinese weighing scales, the fruitmonger on the streets of the bustling town of Baoding in Hebei province is weighing out some oranges and trying to convince the buyers to add a couple of apples from the front of the stall to their shopping basket.
"Prices have trebled in a year, it's tough enough. People want fruit obviously, but they really have to pay for it," says the fruit merchant, who is wearing a bright orange jacket and gives her surname only, Zhang.
A nearby food-stall owner, who smooths the batter for a traditional bing pancake onto a hot plate with admirable dexterity, says he has the same problems. Food is getting expensive in China, especially if it comes from far away.
Wary of its destabilising effect, the senior leadership in Beijing, about four hours away from here by car, has identified inflation as China's biggest threat. The inflation rate rocketed to its highest level in more than 11 years in January, rising 7.1 per cent from the same month in 2007 and the main factor behind the increase was an 18.2 per cent rise in food costs, according to the National Bureau of Statistics.
But prices haven't stopped rising yet and there were warnings that worse price increases may be on the way. The Bank of China expects food prices in February to show a rise of anything up to 23 per cent year on year.
The merchants on the streets of Baoding don't need convincing that the statistics are spot on. Further down the crowded streets of the town, a vegetable seller says that one jin (a Chinese measure for half a kilo) of green peppers will cost four yuan (37 cent), which is double what they cost a year previously.
The peppers come from southern China, and the prices have been driven up since the coldest winter in half a century back in January meant moving goods around the country became a difficult proposition. Eastern and southern China were blasted by the worst blizzards in 50 years, destroying crops, disrupting the supply of goods and hitting power lines to factories.
Supply is only getting back to normal now.
"The mushrooms are local, so they do quite well, but a lot of people cannot afford to eat these foods from the south, especially laid-off factory workers," said the stallholder.
In his annual work report to the National People's Congress, China's annual parliament, premier Wen Jiabao warned that rising prices had to be tamed to ensure ordinary people enjoyed a reasonable standard of living. "The current price hikes and increasing inflationary pressure are the biggest concern of the people," he said.
His remarks struck a chord, and were greeted by no less than 41 rounds of applause from 2,970 delegates assembled in the cavernous Great Hall of the People. Prices are at the top of the public agenda these days and Mr Wen's speech was carried live on public television.
Inflation has led to social unrest in China historically. It was dissatisfaction with prices spiralling out of control after the second World War that led to strikes and social instability, which ultimately led to the failure of the nationalist leader Chiang Kai-shek to assert control.
While the demonstrations in Beijing and other cities in China in 1989 are linked in the popular imagination to the student pro-democracy movement, it was soaring grain prices in the late 1980s that mobilised many factory workers and peasants in China to join the anti-government wave.
One of the most contentious areas is the price of pork, Chairman Mao Zedong's favourite meat and a staple across the country. Last summer, pig herds were ravaged by a highly infectious swine virus called blue ear, which affected millions of pigs and cut supply. The cost of pork surged nearly 60 per cent.
At a meat stall, next to a sausage stall where the innards from the pig are converted into pudding-like delicacies, a side of pig and various cuts are laid out and trade is brisk.
"Prices rose strongly around Chinese New Year, as they always do. They've come back a bit since then, but they are a lot higher that they were last year," said the butcher. A jin of pork costs 12.50 yuan (€1.14), which is down from 15 yuan (€1.37) during the Lunar New Year holiday, but up strongly on late last year, when it cost 10 yuan (92 cent).
As well as being politically destabilising, there are fears that rising prices could undermine China's remarkable economic growth - the economy grew 11.4 per cent in 2007, a 13-year high - and is expected to expand by at least 9 per cent this year.
While people are concerned about rising prices, there are no signs on the streets of Baoding of crisis at the moment, as long as economic growth remains strong.
"Things cost a bit more, but we have a bit more cash in our pockets too, so it's not a problem. Not yet anyway," said one customer.