China's top price regulator on Monday issued an ultimatum to the country's herbal medicine speculators, ordering them to quickly sell their stocks, as the prices of some herbs have surged as many as 10 times over the past two years.
The crackdown on traditional Chinese medicine (TCM) hoarding is aimed at stabilizing medicine prices, according to a statement posted by the National Development and Reform Commission (NDRC), China's top economic planner and price regulator, on its website.
The NDRC has joined other government departments to investigate massive price increases for codonopsis pilosula, a root that is used to prepare several varieties of traditional herbal medicine.
Illegal hoarding by some merchants has exacerbated the already-tight supply of the herbs on the market and helped push up their prices, said the NDRC statement.
The price of the herbs jumped to 90 yuan (13.9 U.S. dollars) per kg in June this year, nearly ten times its previous price of 9 yuan in August 2009, according to NDRC data.
The NDRC sent letters to 10 medicinal supply companies and individuals who hoarded herbs before December 2010, demanding them to sell 200 metric tons of herbs to pharmaceutical companies that produce prepared Chinese traditional medicine with GMP (Good Manufacturing Practice) certificates.
The sales of the herbs must be completed before July 21, 2011, with the price capped at 60 yuan per kg, according to the NDRC.
Another 44 companies and individuals who have been stockpiling the herbs since January this year must also sell 800 metric tons of the herbs to those pharmaceutical firms with GMP certificates before Dec. 31, 2011.
Those who fail to sell their stocks before the deadline will be given administrative punishments, warned the NDRC.
The NDRC said that as essential health items, the prices of traditional herbal medicines must be stabilized in order to keep them accessible for the public.
"It is the responsibility of government departments, pharmaceutical companies and herb merchants to ensure market supply and stabilize prices," it said.
The NDRC urged regional pricing regulatory departments to strengthen their supervision over the herbal medicine market and severely punish those violate pricing laws.
Regulatory authorities have been closely monitoring excessive price increases, as the Chinese government declared inflation control as its top priority earlier this year.
In May, Unilever (China) Co., Ltd. was fined 2 million yuan over statements it made regarding planned price hikes that enhanced the public's inflationary expectations and triggered panic buying.
The consumer price index, a main gauge of inflation, shot up to a three-year high of 6.4 percent year-on-year in June and rose 5.4 percent in the first half of this year, far above the government's full-year inflation control target of 4 percent.
