Food prices, though dipping, still high in China

Fa Yisa arrived in China from Algeria in 1994. Beijing was a "happy city" then, he said. But over the past 18 years, his opinion has changed.

"The living cost is increasing by the minute in Beijing, which makes it almost impossible for low-income earners to afford themselves." he wrote in his blog.

High food prices pushed China's consumer price index up 5.4 percent in 2011, far more than the government's target of 4 percent. Food price increases did ease from 10.5 percent in January to 6.4 percent in May of this year but grocery bills, together with spiraling petrol prices, rising utility bills and stagnating house prices are creating a near-impossible situation for many people in China.

A recent report on the cost of food staples in Chinese cities, released by the National Bureau of Statistics, said that one person should expect to spend more than $47 on food each week.

Many people in China and abroad view the bureau’s reports with deep suspicion, believing that real price rises are greater than indicated by the published official figures. But even at the rate published by the government, the average Beijing resident, who has a monthly income of about $485, would spend nearly 40 percent of that money on food.

Some economists argue that the Chinese taxation system is a factor that leads to high-priced food.

Larry Hsien Ping Lang, an economics professor at the Chinese University of Hong Kong, said the country is experiencing an abnormal economic phenomenon of low wages and high prices.

"The proportion of consumer tax is as high as 64 percent of products," he wrote in a blog.

In Beijing, taxes imposed on supermarket foods normally include a value added tax, ranging from 13 percent to 17 percent, an urban maintenance and construction tax of 7 percent, a business tax of 5 percent, an education tax of 3 percent and an additional 2 percent local education surcharge.

“The government won't do anything about the prices, " said Liu Chen, a self-employed designer in Beijing, in a telephone interview.

The cost of cooking oil, across the board, rose recently, she said, and officials said it was due to a higher cost of beans.

"How ridiculous!" Chen said. "There are many kinds of oil that don't need beans to produce but all the cooking oil brands (cost more) now."

In the late 1980s, the consumer price index was out of control, with a 2 percent rise in 1982 and fluctuations of up to 18.8 percent. Inflation was politically dangerous for the Communist Party and finally led to pervasive panic among people who could hardly afford staple goods.

The government was also facing another headache: An influx of migrants seeking better jobs and homes in urban areas due to the government's lifting its strict regulation of intra-country migration. The official recognition of a socialist market economy was accelerating the tendency of Chinese urbanization.

Large numbers of so-called temporary migrants to cities have grown from about from 20 million to 30 million in the early 1980s to about 53 million at the end of 1999, research by Professor Kam Wing Chan at the University of Washington indicates.

The Ministry of Agriculture has promoted a “shopping basket” program since 1988, aimed to establish suburban bases to produce meat, eggs, milk and vegetables in response to a shortage of food supply.

But the increase in staple foods didn't deliver enough of a decrease in food prices, especially for those sold in supermarkets.

“I don’t usually buy fresh things from supermarkets because their prices are really high," Chen said. "You may even be sympathetic to the restaurants for their nice prices."

In Beijing supermarkets, beef is about $7.50 for a little more than 2 pounds. A ready-to-serve set meal including cooked beef, rice, cola and a side dish costs $3.50 per person, in the popular food chain store Yoshinoya.