CHINA FACES PRICE HIKES IN BASICS _ RICE, BREAD

CHINA FACES PRICE HIKES IN BASICS _ RICE, BREAD

Chinese will pay a lot more for the basics of life - rice and bread - beginning April 1 as Beijing presses ahead with price reform to relieve the crushing burden of subsidies on the state, officials said Wednesday.

However, the state is passing the burden of subsidies from its budget down to the workplace, as workers will get a pay rise to help cope with the new prices, Chinese who had been briefed on the measure said.The price of rice bought in state stores with ration coupons will jump about 44 percent and flour will climb 41 percent, said the Chinese, who had learned of the price increases in briefings at work.

An official at the State Administration of Commodity Prices confirmed by telephone that there would be a nationwide price rise but declined to give details before an official announcement.

While the increase is big in percentage terms, especially when combined with a rise of more than 50 percent in the price of grain last year, the heavily subsidized prices will still be extremely low by world and even Chinese standards.

"Prices are always going up," said one old woman hefting a bag of flour on to her bicycle outside a grain shop. "This I would call an adjustment, not really a rise."

According to the Chinese briefed on the rises, the new price of rice will be 7 cents per pound. Standard-quality flour will cost about the same.

To cushion the blow of higher prices on all products made from grain, every worker will get a new monthly subsidy of under a dollar.

The average urban worker makes $28 to $37 a month but gets heavily subsidized housing, medical care and other benefits.

Chinese leaders are trying hard to shift the burden of subsidies away from the state to make companies more responsive to market forces and to ease

pressure on a budget that has suffered ever-increasing deficits.