Achilles Heel of an "Olympic Host" -- China to Freeze Energy Prices in
an Effort to Quell Worries About Inflation

January 10, 2008

China to Freeze Energy Prices in an Effort to Quell Worries About Inflation

By JIM YARDLEY

BEIJING ― Prime Minister Wen Jiabao responded Wednesday to growing
public anxiety about inflation by announcing that China would freeze
energy prices in the near term, even as international crude oil futures
have continued to surge.

Inflation has hit an 11-year high in China, and a recent nationwide
public opinion survey found that “rising prices of consumer goods”
ranked as the top public concern, followed by income inequality and
corruption.

The freezes were announced on the government’s main Web site after Mr.
Wen presided over a meeting of the State Council to revise policies on
price controls. But the controls are unlikely to get at the causes of
China’s inflation ― a currency policy that keeps the yuan artificially
low and an overheated economy in which demand for goods and commodities
often outstrips supply.