The price of basic essentials increased dramatically in China last year. Food prices climbed more than 18%, while the price of pork soared 50%. Families with low incomes, numbered in the hundreds of millions in China, spend between 30% and 50% of their income on food for the table. The Chinese government is stepping in to introduce heavy fines for retailers and producers if they increase the price of basic necessities.
VOA published an article that explored the reasons why there are no product recalls in China, while there have been constant recalls of China made products in other countries. According to Wang Hai from the Consumer Rights Group, one reason is that there is no recall system in China. Another reason is that the product safety standard, which is set by the manufacturers themselves, with little input from consumers, is lower than that in other countries. Moreover, the Consumer Rights Association is set up by the government and has only a limited ability to represent consumers. China is also lacking a 3rd party inspection agency that is independent from the existing ones run by the government. However, implementing the product safety policy may prove costly and the increased costs may result in many manufacturers not being able to survive.
Source: Voice of America, January 9, 2008
China’s toy exports totaled US$ 7 billion from January to October of 2007, a 20.1 percent increase from the year before. The official statistics showed that following the large scale of toy recall, toy exports were down 6.2 percent in September. The number then rebounded back to 21 percent, consistent with the growth in the first ten months. The European Union and the US are two of the largest markets and account for 67.6 percent of toy exports. It has been predicted that the increasing cost, operation model and reduced export taxes may affect future toy exports. China remains the world’s largest toy export country.
Source: BBC Chinese.com January 6, 2008 http://news.bbc.co.uk/chinese/simp/hi/newsid_7170000/newsid_7173600/7173685.stm
On January 3, Social Sciences Academic published the “Blue book of Chinese Society.” It stated that with China’s GDP growing over 10 percent in 2007, mid to low income families are facing increasing financial pressure. The consumer price increase will continue to be a serious factor in 2008. The Blue Book disclosed that 10 percent of the low income group spent close to 50 percent of their income on food consumption, in addition to the rising cost of living and medical expenses. This group is thus the least capable of surviving. The report also warned that the increasing disparity between the rich and the poor continues to be a threat to social stability.
Source: Radio Free Asia, January 4, 2008
On December 29, the Ministry of Finance approved a 50 million yuan (US$6.8 million) emergency fund to provide temporary aid to college student cafeterias. It is to ensure that, prior to the upcoming winter break, students’ lives will not be affected by the increased price of raw materials. Earlier this year, the General Office of the State Council issued a notice to various levels of governments to provide financial relief to student cafeterias and those students who are on financial aid. In addition, the National Development And Reform Mission also requested the students’ receive discounts in college utility expenses.
Source: China News, December 30, 2007
On December 20, 2007, the International Herald Leader under Xinhua published an article calling on western countries to reconsidertheir their strategy in pushing for an adjustment in the RMB exchange rate. The reason: a World Bank study found the Chinese economy is overestimated by about 40 percent.