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The Honolulu Advertiser
Posted on: Sunday, August 19, 2007

China blames instant noodle makers for inflation

By Joe McDonald
Associated Press

BEIJING — The government slammed Chinese instant noodle makers last week as being partly to blame for a surge in inflation, saying they illegally colluded to boost prices by up to 40 percent in a scheme that has prompted public outcry.

The report came amid a nationwide probe into whether price-fixing or hoarding by producers is to blame for a 15.4 percent jump in food prices in July over the year-earlier period. The government accused the companies of damaging social stability.

Managers of China's major noodle companies met three times since December to illegally set prices, the Cabinet's National Development and Reform Commission announced.

Their collusion "seriously disturbed market price order, harmed normal competition among managers and injured consumers' legal rights," the agency said on its Web site.

The NDRC cited no individual companies or managers and gave no indication of what penalties they might face. Phone calls to the agency were not answered.

Chinese law allows for companies to be fined up to five times the illegal income from price-fixing and possible confiscation of business licenses in serious cases.

Noodles are a staple of the Chinese diet, and the price hike prompted public complaints on Internet bulletin boards and appeals for a government investigation.

An official of China's branch of the International Ramen Manufacturers Association, quoted by the official Xinhua News Agency, defended the price hikes as a response to soaring raw material costs.