CHINA: For the first time in 25...

CHINA: For the first time in 25 years, Chinese consumers will have to pay more for grain staples next month. The price of cooking oil will also rise by nearly 160%, said Zhang Shutian of the State Administration of Commodity Prices. Cooking oil in Beijing now costs about 15 cents a pound. The increases are significant in a country where urban wages range from $19 to $37 a month and where most of it is spent on food. China has long kept prices artificially low in an effort to prevent social unrest. When the prices of eggs, sugar, meat and vegetables rose in 1988, it triggered panic buying and runs on banks. But the state budget is being drained by China’s huge subsidies for food, housing and transportation for urban residents. Last year, nearly one-third of the state budget, a record of more than $20 billion, was spent on subsidies.