China will strengthen price controls on iron ore, copper, corn and other major commodities in its 14th five-year plan for 2021 to 2025 to address abnormal fluctuations in prices, the state planner said on Tuesday.
The country will also step up monitoring and analysis of commodity prices such as crude oil, natural gas and soybean, the National Development and Reform Commission (NDRC) said in a statement.
"(Local governments) should study and judge the import impact in depth, promptly make suggestions... (on matters) such as reserves, import and export, fiscal and taxation, and financial adjustment measures,” the statement said.
The NDRC also said authorities would “reasonably adjust cotton target price levels” and stick to the country’s minimum purchase price policy framework for rice and wheat, it said. The government buys these grains from farmers at a minimum price when the market drops below that level.
The move comes as Beijing prioritises guaranteeing food security for its population of 1.4 billion.
The NDRC said it will build a solid grain supply and stabilise prices.
In energy markets, the state planner said China will adopt a new pricing mechanism for pumped storage, and promote price reforms in transmission and distribution of electricity, in order to improve flexibility in the grid system.
“For high-energy intensity and high-emission industries, (China) will implement differential and tiered electricity prices... to promote carbon reduction,” the statement said.
Commodities prices in the world’s second biggest economy have seen big swings this year driven by post-pandemic demand recovery, global liquidity easing and speculative trading.
Beijing’s recent moves come after soaring metals prices contributed to a spike in factory gate prices and slower growth in industrial output in April.
Government watchdogs have repeatedly urged industrial metal firms to maintain market order, pledged tougher inspections on physical and derivative markets and probes into behaviour that bid up prices.
Futures prices for commodities such as iron ore and corn on the Dalian Commodity Exchange, steel and copper on the Shanghai Futures Exchange all hit historic highs this year.
Premier Li Keqiang also said on Monday that the government will strive to prevent rising commodity prices being passed on to consumers.
(Reporting by Min Zhang, Hallie Gu, Muyu Xu and Shivani Singh; editing by Clarence Fernandez and Jason Neely)
