The central government decides to pay farmers more money to encourage them to improve basic food production. This in turn is raising fears about social unrest across the country.

Beijing (AsiaNews/Agencies) – China’s central government has decided to invest more money in agriculture to curb inflation and thus avoid social unrest before the Beijing Olympics. The authorities are hoping that by paying farmers more money for rice and wheat, they might raise output.

Authorities have frozen retail prices of rice, cooking oil and other goods in an effort to rein in food costs that jumped 23.3 per cent year on year last month. But analysts warned that holding down prices paid to farmers would discourage them from raising production and easing shortages blamed for the increases.

The latest move is thus meant to “raise farmers' enthusiasm for growing grain and make progress in the development in grain production”, the Cabinet's National Development and Reform Commission said in a statement announcing the change.

It also said minimum grain prices paid to farmers would rise as much as 9 per cent.

Prices started to rise sharply in just two weeks last year as the mainland ran short of grain and pork, the country's staple meat.

The jump in food costs hit ordinary Chinese hard in a society where families spend up to half their incomes on food, creating panic and violent protests across the country.

Premier Wen Jiabao, the mainland's top economic official, says cooling inflation is the government's top priority.

He explained that the central government hoped to hold this year's overall inflation to 4.8 per cent—equal to the last year's rate.

For outside economists, that looks unrealistic, forecasting instaed full-year price rises of as much as 6.4 per cent.

• china
• beijing
• olympics
• wen
• jiabao
• inflation
• agriculture
• output
• social
• unrest