The International Herald Tribune has a thoughtful article relating to (like the old saying) The Price of Rice in China, and like most commodities in the world -> it’s going up.

You think the US has seen core price inflation?

Beijing has frozen retail prices of rice, cooking oil and other goods in an effort to curb inflation that saw food prices jump 23.3 percent in February over the same month last year.

Under the latest order, prices paid for rice will rise by 7 yuan, or $1, for every 50 kilograms, or 110 pounds, to 77 to 82 yuan, depending on the type, according to the National Development and Reform Commission.

Wheat prices will rise by 3 to 5 yuan, to 72 to 75 yuan per 50 kilograms. [Ouch]

Outside impact

The government also has frozen prices for gasoline, electricity, public transit and school fees. Chinese oil companies have complained the controls are causing them huge losses by blocking them from passing on record-high crude prices to consumers.

That has prompted refiners to refrain from investing in expanding production, leading to diesel shortages that have disrupted trucking in crucial export areas of the fast-growing southeast region.

My Takeaway

I checked the Commodities listing on IHT  and could not find rice listed. Anyone who could point me to a nice non [[MON]] stock would be appreciated. A rice ETF would be beneficial too imho.

Expect export costs to go up, general weirdness on the Hang Seng as this awkward price controlling will definitely continue through the Olympic games this summer. The last thing the People’s Party would want is journalists doing side pieces about the high inflation in China. They want to look like they’re running a twenty first century country.

The problem is that the greater the pressure grows, the more it will seep into other areas and I’m not enough of a macro economist to understand where. I expect bigger swings in Chinese stocks though and will definitely be looking for Chinese ETFs that relate to commodities in the country because late this year, early next year could be a time of serious growth as the controls are backed off.