The next 48 hours
By George Chen
The opinions expressed are the author’s own.
What might you do in the next 48 hours in China? A number of things — how about rushing to nearby supermarkets to stock up on soap and shampoo if you are a price-sensitive consumer?
Retail prices for those products are set to rise sharply in China from next month. At least two industry leaders — Procter & Gamble and Unilever — were reported by Chinese media to have decided to lift detergent and soap prices by up to 15 percent next month.
State television on Monday showed images of empty store shelves in some cities as residents raced to hoard P&G and Unilever products before the price rises went into effect.
However, officials and statisticians in Beijing seemed less worried about rising inflation. Last month, we heard that the spokesman of powerful economic the planner, National Development and Reform Commission, said inflation should peak in February. Then Yi Gang, deputy governor of People’s Bank of China, the central bank, assured investors that the government was confident that inflation would not to exceed the 4 percent target for the year.
It’s easy to speak but difficult to act. We know your target but the question is, of course, how will you make it happen? I mean in the market, for Chinese consumers, and not just for the sake of the statistics that are rapidly losing credibility among ordinary Chinese people as real life fails to improve.
In Hong Kong, things are no easier.
We were told by the subway operator last weekend that ticket prices are going to rise soon, again. And properties, always a concern of local residents? A new project up for sale in West Kowloon is asking more than HK$15,000 per sq ft.
I was told there is a brand new segment of potential buyers these days — rich Japanese families who have fled Japan and are now seriously considering living in Hong Kong for a while.
In Shanghai, just another financial centre, the city government yesterday finally announced a plan to control property prices. It said property price rises should not exceed the city’s economic growth this year. That still means a roughly 8-10 percent increase, despite the tough measures by the cabinet and local government.
It may be too early to say whether the inflation problem in China and Hong Kong is out of control but it is certainly approaching a sensitive level that has already affected the lives of ordinary people, and will thereby cause social unrest to some extent.
What’s your say? If you live in China, let us know how inflation has affected your life.
Update on March 30: I saw an interesting report on China’s news portal Sina.com last night — economic planner the NDRC finally commented on how some multinational corporations such as P&G and Unilever are raising retail prices for daily consumer products by up to 15 percent without notifying the NDRC.
Apparently, the NDRC feels miffed. It said the government would “investigate” such price increases. Oops! Sounds like the beginning of an interesting new drama about doing business in China.
George Chen is a Reuters editor and columnist based in Hong Kong.