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In response to rising costs and market instability, the Chinese government has taken decisive measures to ensure price stability, particularly in critical sectors such as energy and agriculture. On January 9, Premier Wen Jiabao chaired a State Council executive meeting focused on maintaining stable prices across key industries. The meeting emphasized that fuel, natural gas, and electricity prices would not be adjusted in the near term, while fertilizer prices—such as those for urea and phosphate—should remain steady.
As part of these efforts, the State Council announced plans to amend the "Provisions on Administrative Penalties for Price Violations," with stricter penalties for companies and industry associations found guilty of price manipulation or collusion. This move aims to prevent illegal price hikes and ensure fair market practices.
Earlier, the National Development and Reform Commission issued an emergency notice urging local authorities to conduct immediate inspections of liquefied gas prices, cracking down on illegal price increases, and ensuring market stability. The current State Council meeting reinforced this directive, stating that essential commodities like liquefied gas and fertilizers must be closely monitored before the Spring Festival to regulate pricing behavior and secure adequate supply.
The meeting also highlighted that any necessary adjustments to fertilizer prices due to rising production costs must first be approved by the government's price regulatory authority. This ensures transparency and prevents arbitrary price hikes that could disrupt farmers' access to essential agricultural inputs.
Industry sources have welcomed the decision to freeze electricity prices, which is seen as a relief for fertilizer producers. In 2007, coal and electricity prices surged significantly, with coal prices rising by 8.03% and electricity prices increasing by 7.32%, leading to higher production costs. These increases pushed up the cost per ton of urea by over 100 yuan, resulting in substantial losses for nitrogen fertilizer companies.
Additionally, Shanxi, a major coal-producing province, had already required coal companies to pay additional fees for environmental protection and mine development, further contributing to the expected rise in coal prices in 2008.
Fertilizer companies have expressed support for the government's decision to keep oil and gas-related fertilizer prices stable in the short term. They pledged to manage rising costs internally and maintain affordable fertilizer prices to support spring farming activities. This coordinated effort between the government and industry players reflects a shared commitment to economic stability and agricultural sustainability.