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China says raw materials shortage, demand driving up prices of supplies

A day after India expressed concerns about rising prices of critical medical supplies from China, the Chinese Foreign Ministry in Beijing said soaring demand from India and a shortage of raw materials was driving costs up.

The Chinese government said on Friday companies there had received orders for more than 70,000 oxygen concentrators from Indian companies. Chinese media reports have said firms were adding production lines and hiring workers to meet the surge in orders.

On Thursday, India’s Consul General in Hong Kong, Priyanka Chauhan, expressed concerns about rising prices to the South China Morning Post. “Our expectation at this point is that the supply chain should remain open and product prices should remain stable,” she said. “Even if there is a little bit of supply demand pressure, there has to be some stability and predictability to product prices. And there has to be a sense of governmental level support and efforts. I don’t have the information as to how much influence the Chinese government can have in this matter but if they can, then it would be welcome.”

Ms. Chauhan added that India was asking China "to facilitate cargo flights so that supplies could be delivered”. State-owned Sichuan Airlines had suspended cargo flights to India for 15 days last month. “Unreasonable control should be avoided, and transport linkages should be maintained,” she said, adding that a phone call between the two foreign ministers had helped with some approvals but flights had not yet returned to the same frequency.

China’s Foreign Ministry spokesperson Hua Chunying told reporters China had in April exported to India "over 26,000 ventilators and oxygen concentrators, over 15,000 patient monitors and nearly 3,800 tons of medicinal materials and medicines.” "Relevant Chinese companies have received Indian orders for over 70,000 oxygen concentrators and are working around the clock to deliver them as soon as possible. In addition, India has a strong demand for vaccines raw materials including auxiliary materials. Since the beginning of this year, relevant Chinese enterprises have provided more than 10 tons of such materials to India with more than 20 tons expected to be delivered soon,” Ms. Hua said.

"We agree with the the remarks by the Indian Consul General in Hong Kong that supply chains should remain open and stable,” she added. "We hope all parties can take concrete actions to ensure that the global industrial and supply chains are stable and open. No one should intentionally disrupt and undermine the openness and stability of the global supply chains out of political agenda.”

The spokesperson said the price issue was "a market factor determined by supply and demand.” “We asked relevant enterprises about the rising price. Taking oxygen concentrators as an example, one reason is that the increase in demand affected global supply chains. Besides, due to shortage of raw materials which need to be imported from Europe, production capacity is affected. What’s more, Indian buyers usually make the same demand through various channels and sometimes buy products through different channels. This has overly inflated demand, which has to some extent affected market order and pushed up prices. In early 2020, when China was at the most difficult time of response, we have the same problems. Therefore, we hope all sides can work together to ensure that supply chains are kept open and stable.”

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