China Premier’s Trip to Wheat Farm Shows Food, Inflation Worries

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(Bloomberg) -- Chinese Premier Li Keqiang visited a wheat farm in a province neighboring the capital, underscoring his government’s lingering worries about food security and inflation.

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Li stressed the importance of the wheat harvest this year while touring a farm in Gaobeidian, a city in the northern province of Hebei, Xinhua said on Tuesday. “Everyone should work hard to make sure we hold tight the rice bowls of 1.4 billion Chinese people,” he said.

The outgoing premier also said that both food and energy security needed to be ensured while the government balances controlling Covid-19 and economic growth, the report said. While visiting an electric company in Zhuozhou city, Li said demand for power this summer would require officials to “release advanced capacity of coal production.”

Ensuring grain and energy supply is critical to stabilizing overall prices, Li said. China has implemented a prudent monetary policy in recent years, and didn’t print an excessive amount of money, according to him.

“Currently all major indicators for monetary policy are within a normal range,” Li said. “This is very important for preventing inflation, and for reserving the room for implementing monetary policy flexibly to address new challenges.”

The People’s Bank of China has taken a cautious easing path this year despite the worst Covid outbreak since early 2020. It has been vocal in criticizing the massive easing that counterparts in developed nations undertook in the wake of the pandemic that fueled rapid inflation. The PBOC has refrained from cutting policy interest rates since January while relying more on targeted stimulus for small business, the property sector and infrastructure projects.

Earlier this month, President Xi Jinping reviewed efforts to boost domestic grain production in Sichuan province, as Russia’s war destabilizes global food security. China is one of the world’s biggest wheat importers, leaving it particularly exposed to the effects of President Vladimir Putin’s invasion of Ukraine, a major shipper of grains such as barley, corn and wheat.

That’s prompted the Asian nation’s state stockpiling company to buy newly harvested wheat for the national reserves at record prices this month.

China’s agricultural ministry recently sent teams to central and eastern parts of the country as searing heat and a lack of rainfall threaten to hamper summer planting of corn and soybeans. Maximum temperatures have ranged from 35 to 40 degree Celsius in Henan, Hebei and Shandong provinces since June 15.

That’s drying up the soil, which is bad for the sowing of crops, the ministry said Sunday. Its staff will ensure summer field management and planting goes smoothly by helping exploit water resources and applying anti-drought fertilizers, it said.

(Updates with additional comments from the Premier.)

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